Slack Technologies, LLC v. Pirani

In Slack Technologies, LLC v. Pirani, the U.S. Supreme Court reviewed a Ninth Circuit ruling concerning Slack's 2019 direct listing. Plaintiff Fiyyaz Pirani purchased Slack shares and alleged that the registration statement contained misstatements, violating Section 11 of the Securities Act of 1933. The key question was whether Pirani needed to prove his shares were issued under the allegedly defective registration statement, or if mere traceability to a registration statement sufficed. The Supreme Court, in a unanimous opinion by Justice Gorsuch, held that Section 11 requires plaintiffs to show they purchased shares registered under the specific registration statement claimed to be misleading. The case was remanded.

The Supreme Court reversed the Ninth Circuit and remanded, holding unanimously that Section 11 requires plaintiffs to trace their purchased shares to the specific registration statement alleged to be misleading.

Whether Section 11 of the Securities Act of 1933 requires a plaintiff to prove that the shares they purchased were issued pursuant to the allegedly misleading registration statement, or whether it is sufficient that the shares are merely traceable to that registration statement in the context of a direct listing.

The decision narrows the scope of Section 11 liability for direct listings and potentially other offerings, requiring investors to prove a direct link between their shares and the defective registration statement. It clarifies that not all shares sold after a direct listing are automatically covered, affecting investor protection and litigation strategies in securities cases.