The commission insists that Hinman’s documents contain sensitive internal communications that are irrelevant to the lawsuit.
The Securities and Exchange Commission (SEC) has filed an objection to Magistrate Sarah Netburn’s recent ruling, ordering the agency to surrender the internal drafts of William Hinman’s 2018 speech to Ripple.
According to the SEC, the internal drafts contain confidential SEC information and are not relevant to Ripple’s claims. However, the court has ordered on three occasions that the SEC should disclose internal drafts of Hinman’s speech to Ripple.
“Even if they were relevant, the Speech Drafts contained confidential deliberations and legal advice protected by the deliberative process privilege (DPP) and the attorney-client privilege,” the SEC said.
SEC: There Could Be Future Consequences
Per the SEC, if the Court maintains its order that the Hinman documents should be handed over to Ripple, certain implications may arise that may “chill internal communication not only at the SEC but at other agencies as well.”
Hinman’s disclaimer that the speech contained his personal views has been the central holding of Judge Netburn’s ruling, as she believes the communication that led to the preparation of the speech was not the agency’s deliberations.
The SEC stated that the disclaimer Hinman used before making the speech is standard procedure to ensure market participants do not consider comments from SEC staff as the commission’s policy.
“Indeed, Director Hinman consulted over many weeks with dozens of SEC attorneys, several of whom reviewed and revised multiple versions of the Speech,” the Securities and Exchange Commission said, adding:
“If permitted to stand, the Orders would chill the ability of government employees to deliberate about important policy issues and obtain candid legal advice from agency lawyers. The Orders should be set aside as clearly erroneous and contrary to law, and the SEC should be permitted to withhold the Speech Drafts because they are both irrelevant and privileged.”
Fight Over Hinman’s 2018 Speech
Hinman’s 2018 speech where he declared Ethereum as non-security has been a major issue in the Ripple vs. SEC lawsuit.
In January 2021, Ripple requested that the SEC provide the documents leading to the formulation of the speech, which contains 64 draft internal communications.
However, the commission ignored Ripple’s request, prompting the blockchain company to file a motion late last year to compel the SEC to turn over the document.
Magistrate Netburn has ordered the SEC to surrender Hinman’s documents to Ripple on three occasions. The SEC is still not prepared to surrender the drafts of Hinman’s speech to Ripple.
Ripple CEO Reacts to SEC’s Quest to Protect Hinman’s Documents
Following the SEC’s continuous efforts to protect Hinman’s drafts and other relevant documents that could help resolve the lawsuit, many believe the SEC is hiding something bigger.
In a recent video, Ripple’s CEO Brad Garlinghouse was forced to ask what the Securities and Exchange Commission is trying to hide.
“14 months and they’re still fighting to hide those notes. What are they hiding?” Garlinghouse quizzed.
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