Although the court says that the SEC acted “arbitrarily and capriciously, in violation of the APA,” it would still allow the agency to redeem itself.
Stuart Alderoty, the chief legal officer for Ripple, has expressed concerns over the state of the United States Securities and Exchange Commission (SEC) under the leadership of current chair Gary Gensler. His remarks follow what is yet another disappointment for the regulator in the Fifth Circuit Court after previously losing to Ripple in the XRP lawsuit in July.
According to Alderoty, the unending legal losses are “deeply concerning,” and the once-respected SEC may now be a shadow of its former self. Alderoty noted that the SEC, in Gensler’s tenure, has been characterized by a lot of inconsistencies and erratic actions. These actions suggest a troubling pattern, and it does appear that the SEC may no longer be committed to upholding the law, he added.
Court Slams SEC, Says Regulator’s Disclosure Rule Lacks Reason
Earlier this week, the Fifth Circuit Court of Appeals in the US considered the SEC’s stock buyback disclosure rule as arbitrary and lacking reasonable explanation.
The rule demands that stock issuers must, as a requirement, report daily information on share repurchases. They will do this every quarter and also explain the reason for repurchasing their own stock.
However, multiple US business and trade associations demand a thorough explanation of the rule, hence the legal action.
Although the court says that the SEC acted “arbitrarily and capriciously, in violation of the APA,” it would still allow the agency to redeem itself. The pronouncement reads:
“We recognize that there is at least a serious possibility that the agency will be able to substantiate its decision given an opportunity to do so.”
For what it’s worth, the SEC has been widely criticized for some of its recent moves. Most often, the criticisms border on the lack of clarity of some of its rules. Other times, the regulator is said to be more interested in law enforcement rather than rulemaking.
However, its recent defeats across several cases are set to shape the future of the crypto industry’s regulatory terrain.
In July, the agency lost in the XRP lawsuit as the verdict favored Ripple in the area of retail XRP token sales. It also suffered defeat in the Grayscale filing. More recently, Judge Analisa Torres issued an order on October 25 that officially dismissed charges against Ripple’s CEO Brad Garlinghouse and executive chairman Chris Larsen. That is not to mention that there also have been developments regarding institutional sales of XRP.