The US Securities and Exchange Commission (SEC) has filed a Letter of Supplemental Authority in further support of its motion for summary judgment in its lawsuit against Ripple Labs. In doing so, the US agency seeks to provide additional legal precedent boasting its motion for summary judgment.
What Is The SEC’s New Letter About?
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 for summary judgment. According to the agency, this decision supports the SEC’s case against Ripple.
The case was filed in 2019 and the SEC sued Commonwealth and CEO John Rooney for violating federal securities laws by engaging in deceptive sales practices, including material misrepresentations and omissions of conflicts of interest. The SEC won the case.
Most interestingly, the court rejected a procedural defense that the SEC failed to provide the defendant with adequate notice of the disclosure obligations alleged in the complaint. The SEC argues that Ripple’s “fair notice” argument is equally inapplicable as it was in the Commonwealth case.
The SEC draws a parallel with Ripple because Commonwealth also argued that a 50-year-old Supreme Court precedent regarding disclosure obligations was insufficient to justify fair notice. However, the court ruled in favor of the SEC, stating that fair notice was thereby given. The agency writes:
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.
Accordingly, according to the SEC, the Commonwealth decision provides additional authority for rejecting Ripple’s fair notice defense and granting the SEC’s motion for summary judgment.
What Does This Mean For Ripple?
The XRP legal community does not see any powerful arguments in the letter. As Bitcoinist reported yesterday, attorney Jeremy Hogan sees the technology issue at the heart of the case. If Judge Torres understands technology and decentralization, a Ripple victory seems very likely to him.
Australian lawyer Bill Morgan commented dismissively on the SEC’s new letter, denying any comparability:
If you think that 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 mean a further delay in the ruling. Throughout the case, Judge Torres has always given the opposing party time to respond to the opposing party’s supplemental brief.
“Ripple could file a response to this in under two hours,” writes Rispoli, who, however, expects some delay.
At press time, the XRP price stood at $0.5084.
