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Supreme Court sides with Slack, putting direct listings in jeopardy

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Re: Supreme Court sides with Slack, putting direct listings in jeopardy

#101

Post by TimPC »

usr1106 wrote: post #91
puzzledobserver wrote: post #23

Earlier quoted context omitted.

Thanks! From the added context: 7. Pirrani's suit relied on Section 11 of the Securities Act. This alleges that the company lied in its registration document. 8. In an IPO, all shares are covered by the registration document. In a direct listing, the current shareholders of the company just start trading their shares on the market one day. 9. Notably, a direct listing makes it unclear which shares are registered (cov…

> 9. Notably, a direct listing makes it unclear which shares are registered (covered by the registration document) and which are unregistered. According to SCOTUS, Pirrani can't tell, so he can't prove standing under Section 11. Right. If you read judge Gorsuch's statement quoted in the article a bit between the lines, he says: The Securities Act is a nonsense law in this aspect. If a company makes incorrect statemen…

It’s not a dysfunctional law. It seems perfectly reasonable for a company to have additional responsibilities as a seller of shares. It seems quite ludicrous for the company to be liable when a third party sells shares even if that third party is an employee. It’s not that the share inherently comes with additional protections it’s that there are additional responsibilities based on who the seller is.

I think if a company failing to publish certain disclosures forced people to hold and not sell their shares until such time as the disclosures could be made people would be outraged.

Re: Supreme Court sides with Slack, putting direct listings in jeopardy

#102

Post by [deleted] »

yieldcrv wrote: post #10

> "Naturally, Congress remains free to revise the securities laws at any time, whether to address the rise of direct listings or any other development. Our only function lies in discerning and applying the law as we find it." I really don't see how anyone that actually reads Supreme Court decisions calls this court illegitimate. They are very consistent about not being a super legislature, no matter how disruptive th…

[deleted]

Re: Supreme Court sides with Slack, putting direct listings in jeopardy

#103

Post by brookst »

quesera wrote: post #74
DavidPeiffer wrote: post #54

Earlier quoted context omitted.

I've always been amazed at how much content he writes every day. Typically 3 topics, often quite different, with hypothetical situations added, laymen explanations of esoteric topics, legal arguments each side is likely to bring along with some of their pitfalls. Footnotes and other articles of interest are also provided.

Matt Levine often spends six dense paragraphs of background explanation (much of which is review, if you are a regular reader) before getting to actual topic of the headline. From a lesser writer, this would be disqualifying! Somehow I find myself enjoying it.

He’s one of those rare writers I read just for style. The subject matter is always interesting, but he could write that same volume of prose about the same small rock, every day, and it would be an engaging read.

Re: Supreme Court sides with Slack, putting direct listings in jeopardy

#104

Post by brookst »

TimPC wrote: post #101
usr1106 wrote: post #91

Earlier quoted context omitted.

> 9. Notably, a direct listing makes it unclear which shares are registered (covered by the registration document) and which are unregistered. According to SCOTUS, Pirrani can't tell, so he can't prove standing under Section 11. Right. If you read judge Gorsuch's statement quoted in the article a bit between the lines, he says: The Securities Act is a nonsense law in this aspect. If a company makes incorrect statemen…

It’s not a dysfunctional law. It seems perfectly reasonable for a company to have additional responsibilities as a seller of shares. It seems quite ludicrous for the company to be liable when a third party sells shares even if that third party is an employee. It’s not that the share inherently comes with additional protections it’s that there are additional responsibilities based on who the seller is. I think if a co…

But if the company is misrepresenting facts, shouldn’t it at least have liability to that third party?

I guess maybe this case leaves that open?

Re: Supreme Court sides with Slack, putting direct listings in jeopardy

#105

Post by usr1106 »

TimPC wrote: post #101
usr1106 wrote: post #91

Earlier quoted context omitted.

> 9. Notably, a direct listing makes it unclear which shares are registered (covered by the registration document) and which are unregistered. According to SCOTUS, Pirrani can't tell, so he can't prove standing under Section 11. Right. If you read judge Gorsuch's statement quoted in the article a bit between the lines, he says: The Securities Act is a nonsense law in this aspect. If a company makes incorrect statemen…

It’s not a dysfunctional law. It seems perfectly reasonable for a company to have additional responsibilities as a seller of shares. It seems quite ludicrous for the company to be liable when a third party sells shares even if that third party is an employee. It’s not that the share inherently comes with additional protections it’s that there are additional responsibilities based on who the seller is. I think if a co…

At least the day they go public they should be liable the same way for the information they give. It does not make the new owner or the share any different that it was originally sold before the company was listed.

Re: Supreme Court sides with Slack, putting direct listings in jeopardy

#106

Post by eganist »

vkou wrote: post #88
jquery wrote: post #44

Earlier quoted context omitted.

A bit of an aside, but dual class shares should have a mandatory sunset clause no longer than 5 years. That way companies still can get public money via IPO for risky initiatives without fear of a quick takeover, but you avoid a situation where a company becomes little more than a slush fund for the obsessions of a wayward CEO (Facebook).

Why should we protect FB's investors from themselves? And given the tiny spread in how voting versus non-voting shares trade, it doesn't seem that investors value voting rights very much.

I don't know that this is the right counter-argument against the point parent comment made. This counter argument is defeated pretty easily by pointing at all the other regulation that applies to public markets that private offerings (and thus accredited investors) don't have.

Op might actually have a point here, insofar as it would apply to public stock. If such a class separation exists with private stock, that's a risk an accredited investor is probably either good to understand or flush enough with cash to be protected. But Mark cratering stock that moms and pops bought into, that's a good fit for regulation like anything else involving public markets.

Re: Supreme Court sides with Slack, putting direct listings in jeopardy

#107

Post by grumple »

btown wrote: post #4
slotrans wrote: post #3

Absolutely the wrong interpretation of this decision. Read the June 1 "Money Stuff" instead.

Here's the Money Stuff article: https://archive.is/qVei5#selection-4231.0-4231.5 > And so what happened in Slack is that, on the first day, roughly 118 million shares were available for sale under Slack’s registration statement, and roughly 165 million shares were available for sale without registration. And if you bought stock, there was no way to know which kind of stock you bought: You didn’t buy directly from the…

Presumably this isn't actually true though? Like if you buy 5 shares, someone else's brokerage account goes down by 5 shares at the same time. The transaction is recorded on both sides, isn't it? Should be possible to establish who the seller was.

Re: Supreme Court sides with Slack, putting direct listings in jeopardy

#108

Post by mumblemumble »

puzzledobserver wrote: post #6

Is it just me, or are newspaper articles surprisingly difficult to read? From what I understand: 1. Instead of a traditional IPO, Slack went public through an alternative process called a direct listing. 2. As part of its direct listing, Slack sold some million "registered" and some million "unregistered" shares. 3. What are registered and unregistered shares? I could not find an explanation on Wikipedia. 4. Fiyyaz P…

I think it's safe to conclude at this point that Axios's editorial style is a failed experiment.

https://newrepublic.com/article/167733/axios-guide-writing-w...

Re: Supreme Court sides with Slack, putting direct listings in jeopardy

#109

Post by bravura »

DavidPeiffer wrote: post #54
jholman wrote: post #35

Earlier quoted context omitted.

Honestly it seems like the best practice is always just "read Money Stuff". I'm not a serious follower of financial news, but various things do come across my radar, and since I've subbed to the email version of Money Stuff (about a year now), I always feel like I'm a week ahead of everyone else (again, at this not-serious-follower level, not a week ahead of the folks who are genuinely in the know). Like all the Twit…

I've always been amazed at how much content he writes every day. Typically 3 topics, often quite different, with hypothetical situations added, laymen explanations of esoteric topics, legal arguments each side is likely to bring along with some of their pitfalls. Footnotes and other articles of interest are also provided.

What would be the easiest way to get his work on kindle with zero recurring effort on my part ?

I love Money Stuff but hate reading for pleasure on an LCD display?

Re: Supreme Court sides with Slack, putting direct listings in jeopardy

#110

Post by SamReidHughes »

grumple wrote: post #107
btown wrote: post #4

Earlier quoted context omitted.

Here's the Money Stuff article: https://archive.is/qVei5#selection-4231.0-4231.5 > And so what happened in Slack is that, on the first day, roughly 118 million shares were available for sale under Slack’s registration statement, and roughly 165 million shares were available for sale without registration. And if you bought stock, there was no way to know which kind of stock you bought: You didn’t buy directly from the…

Presumably this isn't actually true though? Like if you buy 5 shares, someone else's brokerage account goes down by 5 shares at the same time. The transaction is recorded on both sides, isn't it? Should be possible to establish who the seller was.

If you make a mid-day order on an exchange you would be able to trace the transaction to a specific buyer and seller, because a specific counterparty got matched with your order. But if you exercise an option, or buy at the opening or closing auction, the shares are naturally commingled together.
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