Another XRP lawsuit update: SEC accuses Ripple of ‘misstating’ fairness doctrine
The legal advice received by Ripple Labs has become one of the contentious issues of the ongoing SEC v. Ripple lawsuit.
After accusing Ripple Labs of selectively denying access to Fair Notice documents, the SEC had asked the court to compel the defendants to produce all the relevant documents pertaining to the legal advice that the blockchain company sought in the past. Supplementing its previous arguments, the regulatory body has now filed its response to Ripple’s 14 May letter, further advancing its motion to compel the turnover of legal advice documents.
The SEC contended that Ripple “misstated” the fairness doctrine principles, before asserting that the factual claim in their “fair notice” could be assessed only by examining privileged communication. The agency further advocated that Ripple had put the advice it sought “at issue” in the ongoing litigation. According to the SEC, Ripple did not have a genuine answer to the aforementioned argument.
Citing Ripple’s Fair Notice defense to be in “good faith,” the agency, in its response letter, added,
“The SEC is entitled to test whether Ripple in fact lacked fair notice, or whether Ripple can truthfully claim that it acted believing in the legality of its conduct. Ripple cannot withhold privileged communications on that precise question.”
Even if Ripple did something wrong, the SEC argued, the confusion about its legal obligations raised a constitutional bar to liability, The SEC submitted,
“Ripple has put the advice it received at issue and should be compelled to produce the relevant documents (or testify thereto).”
After pointing out that the company’s executive, Chris Larsen, explicitly relied on certain legal advice he received, the agency also underlined how Ripple’s “fair notice” defense substantially overlapped with the individual defendants’ “good faith” defense. Their letter claimed,
“The Individual Defendants’ wholesale adoption of Ripple’s fair notice arguments confirms that the defenses are, in fact, identical.”
The SEC, however, did not contend that the individual defendants’ defenses would waive Ripple’s privilege. The agency only argued about what Ripple and the Individual Defendants had said about their respective defenses.
In its conclusion, the regulatory body categorically stated that “fairness” in its truest essence implies that it should be allowed to test Ripple’s claim that it did not understand that its conduct was illegal.