A U.S judge has ruled in favor of the SEC, allowing the regulator to continue sending MOUs to foreign entities as it seeks to gather more information in its case against Ripple.
Ripple had argued that this was an intimidation tactic that the SEC was employing so as to get an upper hand, but in a rare victory for the regulator, the judge has sided with it.
Ripple has been winning many of the small battles in court lately against the U.S Securities and Exchange Commission as its defense continues to gain momentum. However, in the latest one, it’s the SEC that came out on top. A federal judge denied RIpple’s motion to force the SEC to stop sending Memoranda of Understanding (MOUs) to foreign entities seeking to gather information about the company.
As Crypto News Flash reported, the SEC has been reaching out to foreign entities in its quest to dig up more information about the blockchain payments company. The SEC had been sending MOU requests to regulators in other jurisdictions without sharing this with the court.
CEO Brad Garlinghouse and chairman Chris Larsen moved to court a month ago, seeking to bring this to an end. They described the move as an intimidation tactic that was meant to scare away Ripple’s foreign partners. According to the two executives, the SEC was not only sending the MOU requests to foreign regulators but it was also requesting them to serve “burdensome document requests to entities under the foreign regulator’s jurisdiction.”
This tactic has a “significant impact on the recipient of the requests, including Ripple’s overseas business partners, and amounts to an unwarranted intimidation tactic,” they told the court.
However, in her ruling, Judge Sarah Netburn has denied their motion.
Judge allows “intimidation tactic”
Judge Netburn stated that the SEC is well within its rights in asking for information from its foreign peers. This is not a new tactic the regulator is inventing and it has used it before in other cases.
“The SEC is a signatory to the Multilateral Memorandum of Understanding and other bilateral agreements that promote information sharing among foreign nations,” the judge noted.
These agreements permit the SEC to request information from foreign securities regulators, who may decline the Requests—which has happened in response to a few of the SEC’s Requests in this case—or it may agree to facilitate the production of documents from foreign entities under the foreign regulator’s jurisdiction.
She further stated that she had considered all the arguments that Larsen and Garlinghouse had presented. These include their claim that the SEC was engaging in intimidation tactics. However, she noted that “no evidence suggests that the SEC issued its Requests in bad faith.
She then ruled:
Notwithstanding all of this, the Court concludes that the SEC’s use of the Requests is permissible and not an afront to the Court’s jurisdiction.
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