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Rh may own preexisting shares. Often, too, these shares are not subject to registration requirements. See, e.g., 15 U. S. C. §77d(a)(2) (exempting, among other things, transactions “not involving any public offering”); 17 CFR §230.144(a)(3)(i) (recognizing as exempt certain securities “acquired directly … from the issuer … in a transaction or chain of transactions not involving any public offering”); Hazen 60–61. To prevent the stock price from falling once public trading begins, underwriters may require insiders to consent to a “lockup agreement”—a commitment to hold their unregistered shares for a period of time before selling them on the new public market. See 1 J. Bartlett, Equity Finance: Venture Capital, Buyouts, Restructurings and Reorganizations §14.8, p. 333 (2d ed. 1995).

Initial public offerings (IPOs) are an effective way of raising capital, but they also have drawbacks. Among other things, they can involve significant transaction costs. Nor is raising capital the only reason firms might wish to go public; some may simply wish to afford their shareholders (whether investors, employees, or others) the convenience of being able to sell their existing shares on a public exchange. See 73 Fed. Reg. 54442 (2008). Several years ago, a number of companies approached the New York Stock Exchange (NYSE) about the possibility of selling shares publicly on that exchange without an IPO. Ibid. Ultimately, the NYSE proposed rules to facilitate and regulate these “direct listings,” which the SEC approved with modifications. 83 Fed. Reg. 5650 (2018).

Slack is a technology company that offers a platform for instant messaging. It conducted a direct listing on the NYSE in 2019. Pirani v. Slack Technologies, Inc., 13 F. 4th 940, 944, 947 (CA9 2021). As part of that process, Slack filed a registration statement for a specified number of registered shares it intended to offer in its direct listing. Pirani v. Slack Technologies, Inc., 445 F. Supp. 3d 367, 373 (ND Cal. 2020). But because Slack employed a direct listing