Supreme Court Issues Ruling in Key Shareholder Rights Case
According to a report from Bloomberg Law News, the Supreme Court of the United States issued an instructive ruling in the shareholder rights case of Slack Technologies, LLC v. Pirani. In partially overruling the Ninth Circuit Court of Appeals, the nation’s highest court limited the ability of shareholders to file certain lawsuits. Within this blog post, our Miami shareholder dispute lawyers provide an analysis of this case.
Case Review: Slack Technologies, LLC v. Pirani
Background and Facts
In 2019, Slack—a technology company that is now owned by Salesforce—went public through a direct listing. A man named Fiyyaz Pirani purchased 250,000 shares. However, soon after the Initial Public Offering (IPO) share prices dropped substantially. Mr. Pirani filed a lawsuit on behalf of himself and other similarly situated shareholders. The claim alleged that the company provided misleading information in their registration statement, including related to undisclosed service disruptions and its corporate compensation methods. The district court allowed Mr. Pirani to sue despite the fact that he could not prove that his shares were issued under the specific registration statement in question.
The Legal Decision
On appeal, the Ninth Circuit Court agreed with the district court—allowing Mr. Pirani to move forward with his shareholder lawsuit. The company—and its now owner Salesforce—brought the matter all the way to the Supreme Court. The core issue before the court: Does the Securities Act of 1933 require a plaintiff-shareholder to prove that they bought their shares under a specific registration statement if they are bringing their claim on the grounds that the registration statement in question is materially misleading? The shareholder argued “no”, whereas the company (Slack/Salesforce) argued that was a required element to establish standing.
Decision of the Court
On review, the Supreme Court of the United States ruled against the shareholder on the specific issue of registration statements and standing. In a unanimous decision (9-0), the court determined that federal securities law only allows lawsuits over registration statements by holders of shares issued under those documents. In other words, a shareholder must have bought shares pursuant to a specific registration statement if they bring a claim on the grounds that the registration statement in question is defective. In effect, the Supreme Court has limited standing in certain shareholder lawsuits. The ruling could have an impact on Initial Public Offerings (IPOs), as registered shares are generally only permitted to be sold on public markets in the period around an IPO.
Set Up a Confidential Case Review With a Top Miami Shareholder Rights Attorney
At Pike & Lustig, LLP, our Miami shareholder rights attorneys have the professional and legal expertise that you can rely on. If you have any specific questions about a legal conflict, we are ready to help you determine the best course of action. Contact us today for a confidential consultation. Our law firm handles shareholders disputes throughout South Florida from our law office locations in Miami, Wellington, and West Palm Beach.