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> 9. Notably, a direct listing makes it unclear which shares are registered (covered by the registration document) and which are unregistered. According to SCOT
by usr1106 3y ago
> 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 statements in a public listing and offer you shares they will be liable. But if you buy shares of the same company from someone else who owned the shares before the company was listed, the company is not liable for their wrongdoing. There is no reason why some shares of the same type of a single company deserve more protection than others depending on who was a previous owner. A dysfunctional law.
- TimPC 3y agoIt’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.
- brookst 3y agoBut 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?
- usr1106 3y agoAt 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.