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Wall Stays Up a Bit Longer: The SEC Stays Its Approval of the NYSE’s Primary Direct Listing Rules

September 2, 2020

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On August 31, 2020, the SEC notified the NYSE that it was staying its August 26, 2020 approval of the NYSE’s rules that would permit primary direct listings.1 The Wall Street Journal reports that the SEC issued the stay after the Council of Institutional Investors filed a notice that it would petition for a review of the SEC’s approval of the rules by the SEC’s five commissioners. The SEC’s release initially approving the rules cited the Council of Institutional Investors as one of several commenters that expressed concerns regarding the rules.

The SEC’s Rules of Practice do not specify a timetable for completing the review process, which is a prerequisite to seeking judicial review of the SEC’s approval of the rules.2

If you have any questions regarding the impact of this stay or direct listings, please contact Dave Johnson, Warren Lazarow, Jeeho Lee, or another Momentum team member.

1 As discussed in our August 28, 2020 edition of Momentum Minutes, a primary direct listing is a type of direct listing which enables issuers to raise capital in connection with the listing. Currently, only existing stockholders (i.e., employees or private investors) are able to sell stock in a direct listing.

2 SEC Rules of Practice and Rules on Fair Fund and Disgorgement Plans, 17 CFR 201.430(c).

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. David J. Johnson Jr., an O’Melveny partner licensed to practice law in California, the District of Columbia, Hong Kong, and New York, Warren Lazarow, an O’Melveny partner licensed to practice law in California and New York, and Jeeho Lee, an O’Melveny partner licensed to practice law in California and New York, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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