| In Ripple
Case SEC Is Ordered To Produce All
Requests and Responses Or Privilege Log
By Matthew
Russell Lee, Patreon
BBC
- Guardian
UK - Honduras
- ESPN
SDNY COURTHOUSE,
May 19 – In SEC v. Ripple Labs
Inc. et al., a discovery
hearing was held on April 30
before U.S. District Court for
the Southern District of New
York Magistrate Judge Netburn.
Inner City Press live
tweeted it, see below,
then put underlying emails on
Patreon here.
On May 19,
Judge Netburn issued an order
including that "[t]he SEC
is ordered to produce all
documents obtained in response
to the Requests. In addition,
to improve transparency in the
process, the SEC is ordered to
produce copies of all
previously served Requests
within 14 days and produce any
subsequent Requests within 14
days of their service. To the
extent the SEC believes it has
a proper claim of privilege,
it must simultaneously produce
a privilege log." Full order
on Patreon here.
On May 6,
Judge Netburn issued another
order: "ORDER granting in part
and denying in part [126]
Letter Motion for Discovery.
Having reviewed the parties'
submissions, the Court makes
the following clarifications:
(1)The SEC must produce
communications with
third-parties, including
external agencies and market
participants, subject to a
privilege assertion. (2)The
SEC need not produce informal
intra-agency communications,
such as emails, and such
communications need not be
searched or logged.
(3)Intra-agency memoranda or
formal position papers
discussing Bitcoin, Ethereum,
and XRP must be searched for
and produced subject to a
privilege assertion. Examples
of such documents include
Division reports, final
reports of internal working
groups, or formal position
papers submitted to the
Commissioners. Although such
documents may ultimately be
privileged, information that
would be provided on a
privilege log, such as dates
and participants, may itself
be relevant and is
discoverable. (4)Any documents
withheld on the basis of
privilege must be identified
on a privilege log. (5)The
Court directs the parties to
continue to meet-and-confer on
the remaining issues presented
in their letters.
Respectfully, the Clerk of
Court is directed to GRANT in
PART the motion at ECF No.
126. (Signed by Magistrate
Judge Sarah Netburn on
5/6/2021)."
On May 7, the SEC
asked Judge Netburn for a
conference to ask for an order
compelling Ripple to "produce
documents... discussing any
legal advice Ripple sought or
received as to whether
Ripple's offers and sales of
XRP were or would be subject
to, and incompliance with, the
federal securities laws." Then
many exhibits are withheld.
Watch this site.
From April 30:
Netburn: There is not much
case law in this area. [That's
an understatement.]
Judge Netburn:
The SEC's request to a foreign
party could be rejected. But
once a foreign regulator gets
involved, it may be more
compulsory.
Lawyer:
These are binding agreements,
part of international law.
It's not just the SEC calling
up and saying, Could you help
us? There is a treaty. That's
not a request. It's back by
the weight and power of the US
government. Defendants don't
have the same power.
Lawyer:
There should be a level
playing field. Once the
litigation beings, the SEC
should play by the same rules
we have do - the Hague
Convention, letters rogatory.
The SEC has to abide by this.
Judge: If
you agree you and the SEC
could use the Hague
Convention, what's the
difference between that and
the SEC's MOU, except that
it's a bit easier for the SEC?
Lawyer: We only
found out because a foreign
party told the company and we
raised it to the SEC
Lawyer: Under the
Hague Convention, they'd have
to make the request to you and
we'd see it. Here, the SEC is
operating outside the
supervision of the court, in
secret.
Lawyer: The SEC
rushed at the end of the year,
as the Administration was
turning over. Now they have to
play by the rules.
Lawyer 2: Once
the SEC files a complaint,
they are subject to the
Court's rules. They are
evading that to conduct
extensive intl discovery
Lawyer 2:
The SEC can skew the evidence
by limiting what they ask for.
Domestically, we see the
subpoena first and can add our
own request. Same
internationally on letters
rogatory. But that's not the
case on int'l MOUs. And that's
critical.
Lawyer 2:
The SEC has asked for critical
information from 13 sources,
about the impacts of Ripple's
announcement, the connection
to market movements. But they
couched the request to get
only the info they think
supports their argument.
Lawyer 2: We need
info on all sales and RPX,
back to 2013. That information
is hard to get and the Hague
process is too slow for this
case. We need to keep
this case moving for RXP
holders and business partners.
Lawyer 2: When
the SEC filed this suit, many
exchanges drops XRP and many
hedge funds dropped XRP from
their portfolios. Other
jurisdictions that have
concluded that XRP is not a
security are being hit with
these requests, and they are
"freaked out"
Lawyer 2:
They are trying to destroy our
business before we have our
day in court. They used the
file number from their
original investigation, not
acknowledging that it's
already a case in court. They
are no longer in their Article
1 world. It's time for Article
3
Judge Netburn:
Does the SEC want to respond
now? SEC Lawyer (Inner City
Press has covered him before):
There are authorized
multilateral requests. Section
6A says it creates no rights
or obligations. Some have not
responded to us. SEC lawyer:
It's not akin to compulsory
process. The only case on
point is "Badian," Judge
Pitman said it's like
voluntary discovery. Look at
Docket 136-2, page 8... It
depends on the regulator's
discretion. Chief Judge Swain
said this doesn't change
anything
SEC lawyer:
They'll get all the documents
at the end. And they can
object to admissibility.
Lastly, they're able to locate
evidence abroad using their
impressive business
relationship. They are saying,
That takes too much time,
let's go forward without
evidence
SEC lawyer:
Defendants have used FOIA,
that's not subject to the
supervision of the court. The
SEC is not a "super-litigator"
but is a government agency.
They have contractual
relations that the FRCP don't
get at. So we can do this
SEC lawyer: We
want to get it resolved
quickly too. Now they tell us
it's too fast. It's not
inequitable. Thank you.
Judge
Netburn: Why would your
request to foreign regulators
be privileged? And if so, why
not on privilege log? SEC
lawyer: We'll put it on a log.
SEC lawyer: Our
letters to the regulators
state our theory of the case.
That's work product. They're
not entitled to it. Judge
Netburn: They say you've
provided categories, not
redacted versions of the
request. SEC lawyer: We've
extracted the request.
SEC lawyer:
We've requested inter-day
trades, XRP's status, if they
want to call those
"categories." Why do they need
a copy of the letter? There
are sensitivities. Paul Weiss
lawyer: The Judge Pitman case,
they are incorrect. These
requests are not voluntary.
Judge Netburn:
What about your use of FOIA,
that could be considered
compulsory. [Inner City Press
aside: That's not how many
agencies, including financial
regulators like the OCC and
Fed, seem to view it.] Paul
Weiss lawyer: The government
has more power.
Judge Netburn:
I'm going to take this under
advisement. I'm afraid I'm not
going to rule now - I have to
look into some things.
Inner City Press will stay on
this.
The case is
Securities and Exchange
Commission v. Ripple Labs Inc.
et al., 20-cv-10832 (Torres /
Netburn)
***
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