Alpha Alliance: A Supreme Court Case Could Invert Public Offerings

The Supreme Court will hear oral arguments in Slack v. Pirani, a complex securities law case that will determine the ease with which investors can sue companies for alleged misstatements or omissions in their registration statements during listings.
By: Alpha Alliance Capital
WAN CHAI, Hong Kong - June 16, 2023 - PRLog -- A direct listing allows companies to become publicly traded with less red tape than a traditional initial public offering. In lieu of creating new shares and having a bank underwrite them, as in a traditional IPO, management, employees and private investors can sell their existing shares on the public market in a direct listing.

Direct listings, which the Securities and Exchange Commission (SEC) authorized in 2018 to encourage more companies to go public and reverse a trend of businesses remaining privately owned, have not flourished. Bloomberg reported that there were only eleven significant direct listing offerings as of last December.

The case depends on whether Fiyyaz Pirani, a California investor, has "standing," or the legal right to suit Slack, the 2019 direct-listing communications company.

Permission and Registration,

The Supreme Court will not determine whether Slack truly committed any wrongdoing; rather, it will decide whether primary plaintiff Pirani, who purchased shares in Slack's direct listing, is entitled to a trial. The court will decide whether Slack misrepresented its service disruption policies and other business details in the registration statement it submitted in connection with its direct listing.

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