Slack Decision Likely to Impede Direct Listing Investor Lawsuits

Investors in companies that go public through a direct listing will have a harder time bringing cases after a Ninth Circuit decision this week, attorneys say.

The decision favoring Slack Technologies LLC highlights how the securities laws passed in the wake of the Great Depression don’t fully account for alternative routes to public markets that have gained in popularity. Slack was at the forefront of a direct listing movement that has since included Warby Parker Inc., Coinbase Global Inc., and Roblox Corp.

When an investor said in a lawsuit that Slack’s 2019 registration statement failed to disclose the extent ...