- The US SEC files a Letter of Supplemental Authority in further support of its motion for summary judgment against Ripple Labs.
- Ripple’s “fair notice” argument compared to a recent case against Commonwealth Equity Services LLC.
SEC Strengthens Case Against Ripple Labs
The US Securities and Exchange Commission (SEC) submitted a Letter of Supplemental Authority to reinforce its motion for summary judgment in the ongoing lawsuit against Ripple Labs. The US agency aims to provide additional legal precedent to support its motion.
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) April 11, 2023
New Letter’s Significance in Ripple Case
On April 7, 2023, a District of Massachusetts court issued an opinion in the case against Commonwealth Equity Services LLC, granting the SEC’s motion for summary judgment and denying the defendant’s cross-motion. The agency believes this decision bolsters the SEC’s case against Ripple.
The case, initiated in 2019, saw the SEC suing Commonwealth and CEO John Rooney for federal securities law violations involving deceptive sales practices, including material misrepresentations and omissions of conflicts of interest. The SEC emerged victorious.
Interestingly, the court dismissed a procedural defense claiming the SEC did not provide the defendant with adequate notice of the disclosure obligations alleged in the complaint. The SEC contends that Ripple’s “fair notice” argument is similarly inapplicable, as in the Commonwealth case.
Commonwealth argued that a 50-year-old Supreme Court precedent on disclosure obligations was inadequate for justifying fair notice. However, the court ruled in favor of the SEC, determining that fair notice was given. The agency asserts:
First, its holding that longstanding Supreme Court precedent can provide fair notice is identical to the SEC’s position in this case: that Howey and its progeny provided Defendants with sufficient fair notice to defeat their constitutional defense.
Thus, the SEC believes the Commonwealth decision offers additional authority for dismissing Ripple’s fair notice defense and granting the SEC’s motion for summary judgment.
Implications for Ripple
The XRP legal community does not perceive any strong arguments in the letter. As previously reported, attorney Jeremy Hogan believes the case’s core issue is technology. If Judge Torres comprehends technology and decentralization, a Ripple victory appears likely.
Australian lawyer Bill Morgan dismissively commented on the SEC’s new letter, refuting any comparability:
If you think that there is fact similarity in selling an asset like XRP in a market which is 13 years old to buyers to whom it owed no post-sale obligations, & a case in which an investment adviser failed to make all necessary disclosure of potential conflicts of interest from which it benefitted to retail investor clients to whom it owed fiduciary duties and whose funds it managed, feel free to be anxious about the SEC bringing this case to Judge Torres’ attention.
Fred Rispoli, founder of Hodl Law, stated that the letter is not “super on point” but could result in further delays in the ruling. Throughout the case, Judge Torres has consistently allowed the opposing party time to respond to the opposing party’s supplemental brief.
Rispoli asserts that Ripple could file a response in under two hours, but anticipates some delay. At the time of writing, the XRP price stood at $0.5084.