A decision of the Southern District Court of Florida on January 21, 2022 dismissed the defense of fair notice as a matter of law and issued summary judgment of the SEC.
The SEC today submitted a letter of supplementary authority to further support its motion to defend the fair notice.
To Judge Analisa Torres, plaintiffs brought to the table the SEC v. Keener case, which the court concluded that the defendant had unlawfully failed to register as a securities “dealer.”
“In doing so, Keener rejected the same” fair notice “discussion that Ripple claims in this case, and the SEC went on strike claiming that defense failed as a matter of law.” Said.
According to court documents, Keener said that “his actions may be illegal” because he was not notified that his actions could be a “dealer” as defined by the Exchange Act. There was no fair notice. “
Defendant’s allegations included:
1) “The statutory wording is not transparent, so the SEC has published so many interpretations over the years.”
2) The SEC’s “position in this proceeding is directly inconsistent with previous guidance.”
3) Whether the defendant had fair notice about the new way the definition of “dealer” in the Exchange Act applies is a de facto matter that must be decided by the jury.
A decision of the Southern District Court of Florida on January 21, 2022 dismissed the defense of fair notice as a matter of law and issued summary judgment of the SEC.
“The defendant has realized that his actions may be illegal, based on the” exchange law representation, the decision from this circuit applying the definition of “dealer”, and the SEC guidance itself “. ..
The SEC considers the proceedings to be similar to the proceedings in the fair notice regarding the SEC vs. Ripple proceedings and has filed a letter to give additional power to the SEC’s allegations to strike Ripple’s fourth affirmative defense. did.
Defendants reportedly invested in a fourth affirmative defense, claiming that the SEC did not fairly inform that the act could be considered a sale of unregistered securities. I am.
Last year, lawyer Jeremy Hogan said Ripple’s victory over its defense could “save the industry from the SEC” as it serves as a precedent. This means that the SEC has failed to provide fair notifications to the entire digital asset ecosystem in the past.
Earlier this month, the SEC submitted another letter of supplementary authority in support of the strike motion. Plaintiffs have filed a December 20, 2021 decision in court with respect to a court in the Northern District of Illinois dismissing Defendant’s motion to dismiss SEC vs. Fife.
According to the letter, Fife’s defendants alleged that they had no fair notice of the SEC’s new interpretation of the statutory term “dealer.”
The court stated that, for the purpose of evaluating fair notice and due process, “The standard by which the SEC seeks to measure a defendant’s conduct is the law itself, and the language is arguably involving the defendant and everyone else. We have agreed, so we supported the SEC. Securities transactions are clearly notified. “
SEC is SECv. We aim to make the same claim with Ripple. “It is the court, not the parties, who decides whether a particular act is within the scope of the law.”
“Certainly, the court dismissed the defendant’s fair notice defense in a motion to dismiss the stage, despite acknowledging the lack of” binding authority “that constitutes the term” dealer. ” .. In the case of Ripple, the binding authority to create the term “investment contract” has existed since 1946. “
In the letter, Ripple argued that the Fife case did not support the SEC’s allegations. “The previous issue of this court arises in a completely different procedural attitude. As Ripple’s response should be allowed to produce evidence and provide defense in a more complete record, its Whether it plausibly states a recognizable legal theory of affirmative defense.
Hogan said the same thing on Twitter: “It’s at a very different stage in the proceedings, and the standards are completely different from the SEC vs. Ripple case.” In the case of “Fife”, the defendant tried to claim “fair notice” (and failed) to completely dismiss the proceedings because the burden on the parties moving to strike the complaint was so high. did). Fife can later raise it as an affirmative defense-and I expect them to do so.
“In the case of Ripple, it is the SEC that is trying to come up with a positive defense of fair notice, and there is a high burden to deal with it. The general idea in modern court is a” plausible “win. Unless there is no way to do that, you should look at the evidence and make a decision, “he explained.
