Judge is called on by SEC to shield documents relating a speech by William Hinman
The Securities and Exchange Commission (SEC) has filed to have protected documents showing its former chief financial officer acknowledging that Bitcoin and Ethereum are not securities.
SEC files to protect crucial documents related to the Ripple case
William Hinman said in a statement in June 2018 that to the best of his knowledge, “current offers and sales of Ether are not securities transactions.”
The new move includes reaffirming the SEC’s case that Hinman’s statements are under attorney-client privilege because they were made as an exchange between Hinman’s attorneys and the SEC. Judge Sarah Netburn dismissed an appeal last month by the SEC to overturn a ruling about the speech in January of this year.
“The privilege applies because these documents, in whole or in part, reflect communications between Director Hinman and SEC attorneys requesting and providing legal advice about a matter under the SEC’s purview – when an offer or sale of a particular digital asset constitutes an investment contract and thus a securities offering as defined in the federal securities laws – and correspondingly, what director Hinman could say about this matter in the speech,” the motion stated.
Last July, Ripple sought to ask Hinman for his thoughts on Ethereum at the time to build a similar argument for XRP. The SEC has filed a petition denying Ripple’s request for Hinman to appear at an impeachment, saying it would set a precedent to normalize the removal of senior government officials.
The SEC went on to say that it does not speak through staff but enforcement. Hence anything Hinman said becomes “deliberative” and privileged. Judge Netburn threw out this argument, saying that the unique nature of the case “involves significant policy decisions in our markets, the amount in controversy is substantial, and the public’s interest, in this case, is significant.”
The deliberation process privilege protects “documents that reflect the advice, recommendations, and considerations that comprise part of the process by which government decisions and policies are formulated” from disclosure.
Another storm was brewing on the Hinman front when whistleblower Empower Oversight demanded the release of emails from the SEC in which Hinman exchanged letters several times with law firm Simpson Thacher despite SEC censorship for ethical reasons. Simpson Thacher belongs to a consortium called the Enterprise Ethereum Alliance.
The SEC filed a lawsuit against Ripple and its management in December 2020, alleging the company sold unregistered securities to raise funds, contrary to Section 5 of the Securities Act of 1933.
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