Joseph A. Grundfest, an emeritus professor at Stanford Law School and a scholar of securities fraud litigation, disagreed with the Ninth Circuit’s decision and said the inability to trace direct-listing shares can be remedied through agency action.

“If the SEC simply required that registered shares come to market a day before exempt shares were allowed to trade, Section 11 liability would be preserved,” he said in an email. “There would be no need to torture the statutory text or to abandon decades of precedent to address this challenge.”

Grundfest, who submitted a brief supporting Slack with former SEC Chairman Jay Clayton, said the Ninth Circuit’s decision “effectively also erases the tracing requirement for a large number of cases that do not involve direct offerings.”