Slack Technologies v. Pirani
In brief
Section 11 plaintiffs must connect their purchased shares directly to the registration statement they say was misleading.
- Where it stands
- Decided
Decided 9-0 · June 1, 2023 · Opinion by Justice Gorsuch
- What it’s about
- In a case involving Slack's direct public listing, the Supreme Court ruled that individuals suing under Section 11 of the Securities Act of 1933 must prove they purchased shares directly traceable to the allegedly misleading registration statement.
- Who it affects
- The decision narrows who can bring Section 11 claims after a direct listing, where registered and unregistered shares may trade together. Investors who cannot trace their shares to the challenged registration statement may not use Section 11.
Summary: written with AI from the case record.
What it's about
The case clarifies a tracing requirement in the 1933 securities law, which governs disclosures made when securities are offered for sale.
Question presented
Whether Sections 11 and 12(a)(2) of the Securities Act of 1933 require plaintiffs to plead and prove that they purchased shares registered under the registration statement they claim is misleading.
What the Court decided
Holding
Section 11 of the 1933 Act requires a plaintiff to plead and prove that he purchased securities registered under a materially misleading registration statement. The relevant language of §11(a) authorizes an individual to sue for a material misstatement or omission in a registration statement when the individual has acquired “such security.” Slack argues the term “such security” refers to a security issued pursuant to the allegedly misleading registration statement; Mr. Pirani says that the term may encompass a security not registered under an allegedly misleading registration statement. 13 F. 4th 940, vacated and remanded.
- Result
- Vacated
The vote
From the opinions
“Section 11 of the 1933 Act requires a plaintiff to plead and prove that he purchased securities registered under a materially misleading registration statement.”
What's next
The case returns to the Ninth Circuit for further proceedings consistent with the Supreme Court’s decision. Lower courts will apply the tracing requirement in similar Section 11 cases, especially those involving direct listings.
Documents
Docket activity
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AI analysis generated: Impact Analysis
AI analysis generated: Opinion Summary
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Court Order added: Lower Court Orders/Opinions
Brief added: Questions Presented
More questions
- What did the Supreme Court rule in Slack Technologies v. Pirani?
- The Court said Section 11 plaintiffs must plead and prove that they bought securities registered under the allegedly misleading registration statement.
- Who won Slack Technologies v. Pirani?
- Slack won the Supreme Court case. The Court vacated the Ninth Circuit’s decision and remanded the case for further proceedings.
- What does Slack Technologies v. Pirani mean for investors?
- Investors bringing Section 11 claims must trace their shares to the challenged registration statement. This may be difficult when registered and unregistered shares trade together.
- Is the tracing rule still the law after Slack Technologies v. Pirani?
- Yes. The Court unanimously said Section 11 requires plaintiffs to plead and prove they purchased securities registered under the misleading statement.
- What happens next in Slack Technologies v. Pirani?
- The Ninth Circuit will handle further proceedings under the Supreme Court’s rule. Other courts will apply that rule to similar investor claims.
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.