Direct Listings and the Tracing Doctrine: Why Congress or the SEC Must Intervene

Abstract

In September 2021, the U.S. Court of Appeals for the Ninth Circuit in Pirani v. Slack Technologies became the first circuit to have a say on whether an investor who purchases securities in a direct listing can establish standing to bring claims under Section 11 of the Securities Act of 1933. The Ninth Circuit’s controversial ruling challenges fifty years of established jurisprudence and has the potential to deter companies from performing direct listings. This Note argues for Congress or the SEC to intervene by requiring or encouraging companies to adopt blockchain technology once they go public via a direct listing. The goal of this approach is to ensure that companies continue to use direct listings, while also preserving adequate investor protections.