Tag: Investor Advisory Committee

SEC’s Investor Advisory Committee recommends SEC action on §11 liability after Slack. How likely is it?

In a meeting last year of the SEC’s Investor Advisory Committee, the Committee heard from a panel regarding the continued viability—or rather, lack thereof—of §11 liability following SCOTUS’s decision in  Slack Technologies v. Pirani.  Slack, as you know, limited §11 liability in direct listings—and, perhaps increasingly, in the context of other offerings as well—given the difficulty of tracing shares to the defective registration statement in direct listings, where both registered and preexisting unregistered shares may be sold at the same time. The presenting panel made a strong pitch for SEC intervention to facilitate tracing and restore §11 liability, ultimately advocating that the Committee make recommendations to the SEC to solve this problem. (See this PubCo post.) Two subcommittees have now crafted a recommendation, and at the recent meeting of the Committee on March 6, there was a brief discussion of that proposal. In the end, the Committee voted in favor of submitting the recommendation to the SEC, with one abstention and one negative vote. Recommendations from SEC advisory committees often hold some sway with the staff and the commissioners, so it’s worth paying attention to the outcome here. But will the new Administration be receptive to recommendations to facilitate the restoration of §11 liability? From the comments of Commissioner Hester Peirce, it doesn’t sound that way.