Slack Technologies, LLC. v. Pirani
United States Supreme Court
143 S. Ct. 1433, 598 U.S. 759 (2023)
- Written by Eric Miller, JD
Facts
Slack Technologies, LLC (Slack) (defendant), a maker of instant-messaging technology, sought to sell shares through a direct listing—that is, a process by which existing shares of companies that were not publicly traded could still be sold without an initial public offering. As part of the process, Slack filed a registration statement with respect to certain registered shares. However, most of the Slack shares sold in the direct listing were unregistered. Fiyyaz Pirani (plaintiff) purchased 250,000 shares of Slack stock. After a price drop, Pirani brought a class-action lawsuit against Slack, alleging violations of §§ 11 and 12 of the Securities Act of 1933, which imposed strict liability on issuers, underwriters, and others who signed or helped prepare a false or misleading registration statement. Slack moved to dismiss for failure to state a claim, arguing that §§ 11 and 12 required the shares at issue to be directly traceable to a registration statement, which Pirani had failed to prove. The case then went to the United States Court of Appeals for the Ninth Circuit on interlocutory appeal, dividing the panel, and ultimately to the United States Supreme Court.
Rule of Law
Issue
Holding and Reasoning (Gorsuch, J.)
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