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Volume X, Number 269

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SEC Stays Implementation of New NYSE Direct Listing Rules

As discussed in the August 31, 2020 edition of the Corporate & Financial Weekly Digest, on August 26, the Securities and Exchange Commission (SEC) approved rules proposed by the New York Stock Exchange (NYSE) to allow companies engaging in a direct listing to raise capital directly through the sale of primary shares upon the direct listing, in addition to, or instead of, facilitating sales of shares solely by existing shareholders.

In a letter to the NYSE, dated as of August 31, the SEC notified the NYSE that it has received a notice of intention to petition the rules. Accordingly, the SEC has stayed implementation of the new NYSE direct listing rules until such time as the SEC orders otherwise.

The SEC’s action follows a letter issued by the Council of Institutional Investors (CII) pursuant to which CII stated its intention to petition for a review of the new rules regarding direct listings. CII objects to the direct listing rules out of a concern that companies may attempt to limit their liability to investors for losses associated with false statements of fact or material omissions of fact within the SEC registration statement relating to the direct listing.   Particularly, they cite a concern with the ability of aggrieved investors to trace their shares to those offered pursuant to a particular registration statement, given the fact that some direct listings may not include (and prior direct listings have not included) any lockup agreements and both shares sold pursuant to a registration statement and those sold outside of a registration statement may enter the market quickly following the direct listing.

The full text of the SEC’s letter staying the implementation of the new direct listing rules is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 248

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About this Author

Brian Hecht Corporate Lawyer Katten
Partner

Brian Hecht is a Corporate partner in Katten's New York office. He offers broad transactional experience in capital markets transactions, mergers and acquisitions and corporate governance matters. Within capital markets, Brian's practice focuses on initial public offerings, high yield offerings, spin-offs, tender offers and investment grade debt offerings. Within mergers and acquisitions, he represents private equity funds and public companies in both public and private acquisitions and divestitures.

Prior to joining Katten, Brian was a...

212.940.8516
Mark Reyes Securities Lawyer Katten Muchin law firm Chicago office
Partner

Mark J. Reyes concentrates his practice in corporate and securities matters, including representing issuers and investors in public offerings and private placements of equity and debt securities and advising clients in complex corporate transactions such as mergers, acquisitions, private investments in public equity (PIPEs), private equity investments and joint ventures. He also counsels public companies on securities law compliance, disclosures and corporate governance matters.

Shown below is a selection of Mark’s engagements.

  • Representation of hospitality company in connection with its initial public offering and listing on NYSE, as well as ongoing counseling with respect to compliance with securities laws and NYSE rules, disclosure and corporate governance matters.
  • Representation of NASDAQ-listed public company in the banking industry in connection with strategic transactions, capital raising transactions, compliance with securities laws and NYSE rules, disclosure and corporate governance matters, including strategic acquisitions, notes offering and at-the-market offering.
  • Representation of clean tech manufacturer for industrial equipment in connection with alternative public offering and listing on NASDAQ, as well as ongoing counseling with respect to compliance with securities laws and NASDAQ rules, disclosure and corporate governance matters.
  • Representation of NASDAQ-listed issuer in connection with selling stockholder block trades.
  • Representation of NYSE-listed industrial manufacturer with respect to compliance with securities laws and NYSE rules, disclosure and corporate governance matters.
  • Representation of NASDAQ-listed medical device company with respect to compliance with securities laws and NASDAQ rules, disclosure and corporate governance matters.
312-902-5612
Mark D. Wood, corporate securities lawyer Katten Muchin Chicago Law firm
Partner

Mark D. Wood is head of Katten's Securities practice and concentrates in corporate and securities law. Mark represents public companies, issuers and investment banks in initial public offerings (IPOs) and other public offerings, private investment in public equity (PIPE) transactions, debt securities and other securities matters.

Mark also represents clients in complex corporate transactions, including tender offers, mergers, acquisitions, dispositions, going-private transactions, private equity investments, joint ventures and...

312-902-5493