A unanimous Supreme Court has confirmed that a claim brought under section 11 of the Securities Act of 1933 (“1933 Act”) requires that a plaintiff plead and prove that the shares purchased were issued pursuant to an allegedly false or misleading registration statement, Jones Day notes.
Under the Court’s ruling, companies that issue shares via a direct listing cannot be strictly liable under section 11 unless purchasers of the securities can prove that the shares they bought are traceable to a materially misleading registration statement. Slack Technologies LLC fka Slack Technologies, Inc. et al. v. Pirani, ___ U.S. ___ (2023). A plaintiff who purchased unregistered shares through a direct listing that are not traceable is instead limited to claims under the Securities Exchange Act of 1934, and must meet the enhanced pleading requirements applicable to those claims. Read more.
