Introduction
On 13 July 2023, Hon. Analisa Torres, a district judge at the United States District Court for the Southern District of New York, issued a pivotal ruling in the SEC vs Ripple Labs lawsuit, which has been ongoing since December 2020. The U.S. Securities and Exchange Commission (SEC) had accused Ripple Labs Inc. and its senior executives, Bradley Garlinghouse and Christian A. Larsen, of unlawfully offering and selling securities, thereby violating Section 5 of the Securities Act of 1933. The SEC also claimed that Garlinghouse and Larsen aided and abetted these violations.
Both parties had submitted their summary judgment motions, and the court issued a mixed ruling. Specifically, the court granted the SEC’s motion for summary judgment on Institutional Sales but denied it for other matters. Conversely, Ripple’s motion for summary judgment was granted concerning Programmatic Sales, Other Distributions, and sales made by Larsen and Garlinghouse but was denied regarding Institutional Sales. A trial date has been set for 23 April 2024. On 19 August 2023, the SEC filed its notice of motion to certify for interlocutory appeal, which was subsequently rejected by Judge Torres on 3 October 2023.
Jeremy Hogan’s Detailed Analysis
On 8 October 2023, American lawyer Jeremy Hogan, who has been providing valuable analysis and commentary throughout this lawsuit, shared an extensive thread on social media platform X, dissecting the possible future scenarios in the SEC v. Ripple Labs case. Hogan’s analysis suggests that the SEC faces a challenging path ahead with limited good options.
- Going to Trial: Hogan assigns a 39.456% chance that the SEC will move forward with the trial against individual defendants next April. He emphasizes that the judge has left only the most complex parts of the case for trial, making it a risky move for the SEC. Should the SEC opt for this route, an appeal wouldn’t be filed until 2025, with an appellate ruling likely not arriving until 2026. The case would then most likely be remanded back to Judge Torres for further litigation, with a final resolution not expected until 14 June 2027.
- Settlement with Individual Defendants: Hogan gives this option a 32.113% chance. Settling with the individual defendants would expedite the SEC’s path to an appellate court by 9-12 months and save resources. After such a settlement, the case would proceed to “remedies” litigation, which Hogan predicts would extend deep into 2026, specifically until 14 August 2026.
- Full Settlement: Hogan sees an 18.987% chance for this scenario. A full settlement would allow the SEC to claim a “win” and collect a significant financial penalty from Ripple. However, Hogan notes that the SEC has shown little willingness to compromise so far.
- Other Options: Hogan leaves an 8.675% chance for scenarios he hasn’t considered. He concludes that the SEC faces several bad or lengthy options, and the summary judgment will remain the law of the land until at least 2026.
Hogan’s analysis reveals that the SEC is in a precarious position, with no easy paths to a quick or favorable resolution. The most likely outcome, if the SEC pushes the entire case to trial and then appeals, would be a final resolution only by 14 June 2027.
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