- A dispute has erupted within the SEC over how to handle settlements – possibly due to a settlement offer from Ripple.
- According to attorney Jeremy Hogan, a settlement between Ripple and the SEC could happen very soon.
In a new YouTube video, Jeremy Hogan of the law firm Hogan & Hogan spoke about the latest events regarding the SEC’s lawsuit against Ripple. As Hogan noted, two SEC commissioners released comments contradicting a statement made by the SEC chairwoman. Specifically, the opinions addressed how the SEC handles settlements with companies that are sued.
The first of the two opinions was issued by SEC Vice Chair Allison Herren Lee and represented a 180-degree turn from previous policy. In her statement, Lee wrote that the SEC’s Division of Enforcement will no longer recommend settlement offers to the Commission that are contingent on the granting of a waiver.
This return to the division’s long-standing practice ensures that the consideration of waivers is forward looking and focused on protecting investors, the market, and market participants from those who fail to comply with the law.
Violations of certain provisions of the federal securities laws give rise to automatic disqualification from exercising certain privileges, including being considered a Well-Known Seasoned Issuer (WKSI)
Hogan speculates that this is specifically relates to Ripple’s case. According to Hogan, Ripple may have made a settlement offer to the SEC, which the SEC rejected, leading to the statement. The settlement, according to Hogan, may have been that Ripple will put the sale of XRP under the umbrella of the SEC, but will still have the ability to sell XRP to large investors.
Has Ripple made a settlement offer to the SEC?
However, Commissioners Hester M. Peirce and Elad L. Roisman also released a statement “on contingent settlement offers” a little later. This “blew my mind and is very abnormal,” as Hogan elicited. Peirce and Roisman together disagree with Vice Chair Lee (until Gary Gensler takes over). The statement said:
For the reasons stated above, we disagree with Acting Chair Lee’s attempt to rescind that policy by directing the Division of Enforcement to decline to recommend contingent settlement offers to the Commission for consideration. This change marks a return to an unwieldy process that treats as completely separate what is in fact interrelated.
It re-introduces an artificial separation between the process by which an entity reaches a resolution on its violations of securities laws and the process by which it obtains clarity with respect to the collateral consequences of those violations. The result will be a longer period between the initiation and resolution of enforcement matters. We do not see how this outcome advances either the Commission’s mission or serves the interests of investors.
As Hogan stated, this solidifies his thought, his speculation, that there must have been a settlement offer from Ripple to the SEC. There is currently no other SEC litigation big enough to trigger this controversy, the attorney said.
The issue is not over until Mr. Gensler is confirmed as the new head of the SEC. And after that happens he will then make the decision., And when will he be confirmed? He’s not even scheduled to be voted. […] He is a crypto guy, and he does not want to see Ripple leave to Japan. But this is just my opinion, and it’s just as good as yours. I believe that Gensler will approve the settlement that I believe Ripple offered.
I no longer believe that the most likely outcome is that this case goes on to the end of the year. The main reason I say this is not I trust in Gensler so much, but I sense that Ripple is conceding more that I previously imagined, and therefore I feel that the sides have that much come closer to an agreement than I thought it would be possible.