On September 4, 2020, Davis Polk filed a motion with the Securities and Exchange Commission (the “SEC” or “Commission”) on behalf of the New York Stock Exchange LLC (“NYSE”) to lift an automatic stay preventing NYSE from implementing an expansion of its direct listing rules approved by the SEC’s Division of Trading and Markets (the “Division”) on August 26, 2020 pursuant to delegated authority. The rule changes would, for the first time, permit issuers to raise capital by directly selling new shares upon initial listing with NYSE without a firm commitment underwritten offering—an innovation that has generated significant market interest because of its potential to expand access to U.S. equity markets, increase efficiency and enhance investor choice.

Davis Polk filed the motion after an opponent of the rule changes announced its intention to petition the Commission for review of the Division’s approval order. This notice triggered an automatic stay of the rule changes under the SEC’s Rules of Practice pending further action by the Commission. Davis Polk argued that the automatic stay should be lifted for various reasons, including because it risks harm to issuers and the investing public in light of a limited fall 2020 window for raising capital that may be lost if the stay remains in effect, and because the purported harms identified by the objector were speculative and did not flow from NYSE’s rule changes.

The Davis Polk litigation team includes partner Paul S. Mishkin, counsel Daniel J. Schwartz and associates Lindsay Schare and Anwesha Banerjee. Litigation partners Ted Polubinski and Michael S. Flynn also provided advice. The Davis Polk corporate team includes partners Joseph A. Hall, Marcel Fausten, Annette L. Nazareth and Zachary J. Zweihorn. Members of the Davis Polk team are based in the New York and Washington DC offices.