Court backs Ripple in SEC document-disclosure dispute

Magistrate Judge Sara Netburn ruled that the U.S. Securities and Exchange Commission (SEC) must provide the requested Ripple documents for review in camera.

Judge Netburn is setting this up to Order the SEC to give them to her to review in camera.

— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) August 31, 2021

At the August 31 hearing, held by teleconference, the parties discussed the deliberative process privilege for the SEC. This is a legal principle allowing the regulator to refuse to disclose documents or testimony, citing the confidentiality of data and sources.

Netburn said that Ripple had presented compelling arguments in support of its request, and therefore she needed to review the documents to determine whether they should be protected from disclosure.

The term review in camera, which Netburn used, means that at this stage the defendants will not be able to review the SEC data provided. If the judge deems them important to the case, they will be made public at an open hearing.

A SEC representative sought to overturn the judge’s ruling, citing “special treatment for the defendants” and creating a “dangerous” precedent for the regulator, but Netburn rejected these arguments. In her words, Ripple will not obtain privileges, as the company’s lawyers will not see the documents until she decides otherwise.

(3/3) Netburn interrupts and reminds Tenreiro «the defendants won’t be reviewing them» but that she will be, and schools Tenreiro how she does in camera review and why it is fair. 🔥🔥🔥🔥

— CryptoLaw (@CryptoLawUS) August 31, 2021

Netburn must review the SEC information by September 28, after which she will decide whether to uphold its secrecy. The regulator has been ordered to submit the documents with minimal redactions.

During the hearing, the question of providing the SEC access to Ripple employees’ Slack correspondence was not raised. 

Former SEC corporate finance director William Hinman said that warned Ripple about the risk that XRP could be deemed a security.

Earlier, Brad Garlinghouse’s company requested data on regulator employees’ cryptocurrency transactions.

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