In Slack Technologies, LLC v. Pirani, No. 22-200, 2023 U.S. LEXIS 2301 (U.S. June 1, 2023), the Supreme Court of the United States (Gorsuch, J.) held that Section 11 of the Securities Act of 1933 (the “Securities Act”), 15 U.S.C. § 77k, requires plaintiffs to show that they purchased securities registered under the registration statement they seek to challenge, a requirement the Supreme Court referred to as “tracing.” In Slack, the public offering occurred under circumstances that did not allow the plaintiff or other purchasers to trace any security to the challenged registration statement. As a result, the Court vacated the decision of a panel of the United States Court of Appeals for the Ninth Circuit that had relieved plaintiff of a tracing obligation. The Supreme Court’s unanimous opinion confirms that courts must strictly enforce Section 11’s tracing requirement even when doing so precludes all purchasers in an offering from accessing Section 11’s liability provisions.
John M. Landry is a special counsel in the firm's Los Angeles office. He is a member of the firm's Business Trial Practice Group.