2021-06-28 12:13:06
Image: William Hinman, former director of the SEC’s Division of Corporation Finance
The U.S. Securities and Exchange Commission (SEC) and Ripple Labs are jousting — yet again — over discovery in the SEC v. Ripple lawsuit. This time, the SEC wants to block Ripple from calling Silicon Valley lawyer William Hinman, the former director of the SEC’s Division of Corporation Finance, to testify, according to a new legal filing.
The SEC has filed a motion seeking to quash Ripple’s request to have Hinman testify at a deposition on June 30.
Ripple says Hinman likely has information about the SEC’s policies regarding digital assets, its views on Bitcoin and Ether, and communications with Ripple and third parties about the regulatory status of XRP. The information could prove critical for Ripple as it seeks to bolster its fair notice defense.
“Other than the five Commissioners themselves, no SEC officers have more significant responsibilities or a higher rank than the directors of the SEC’s six divisions,” wrote SEC counsel Ladan Stewart in a letter to U.S. Magistrate Judge Sarah Netburn, who is overseeing discovery for the lawsuit.
In her letter, Stewart called for the subpoena to be voided, arguing that Hinman had no first-hand knowledge of the facts underlying the litigation and Ripple could not meet the burden of showing “exceptional circumstances” that justified deposing a former high-ranking government official like Hinman.
“In the alternative, the Court should quash the Subpoena without prejudice until after Judge Torres’s ruling on the SEC’s motion to strike Ripple’s fair notice defense,” Stewart wrote. “If the Court grants the SEC’s motion, Ripple’s principal basis for seeking to depose Director Hinman would no longer exist. If the Court does not, its interpretation of the defense may nevertheless determine whether Director Hinman has any first-hand knowledge of facts sufficient to meet the ‘exceptional circumstances’ test.”
“Subjecting former officials’ decision-making processes to judicial scrutiny and the possibility of continued participation in lawsuits years after leaving public office would serve as a significant deterrent to qualified candidates for public service,” Stewart said.
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