(Reuters) — The U.S. Supreme Court on Thursday gave Salesforce Inc.’s Slack Technologies another chance to avoid a lawsuit over the company’s direct listing of the communications software company in 2019.
In a 9-0 ruling, the justices threw out a lower court ruling that had allowed the proposed class action filed by shareholder Fiyyaz Pirani to proceed under what the Supreme Court concluded was a misreading of a federal investor protection law. A direct listing is an alternative to a traditional IPO.
The judges ordered the San Francisco-based 9th US Circuit Court of Appeals to rehear the case.
Pirani’s lawsuit alleged violations of Sections 11 and 12 of the Securities Act of 1
933. He alleged that the company’s registration statement and prospectus for its direct offering contained misrepresentations about service interruptions, the credits it promised to pay customers when service was interrupted, and competition from Teams, Microsoft’s competitor software.Slack argued that the lawsuit must be dismissed because Mr. Pirani cannot prove that he purchased registered shares that were specified in the company’s allegedly misleading registration statement rather than shares that were exempt from registration. The registration statement was filed with the US Securities and Exchange Commission.
The judges agreed with Slack.
A plaintiff must “show and prove that he purchased shares traceable to the allegedly defective registration statement,” conservative Justice Neil Gorsuch wrote in the ruling.
Salesforce, a major business software maker, bought Slack for $27.7 billion in 2021.
Source link
