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A federal judge ruled that emails containing a draft speech by a former SEC official were not protected by deliberative process privilege.
The Securities and Exchange Commission (SEC) is to send emails to Ripple with a draft of former director William Hinman’s speech on whether ethereum is a security in the ongoing lawsuit the regulatory agency has filed against the crypto startup, a judge ruled in Thursday .
Attorneys for the SEC have previously said that these documents contain employee discussions and are therefore protected from disclosure. Justice of the Peace Sarah Netburn of the Southern District of New York ruled that some of these documents were indeed protected, but ordered the regulator to hand over others, including an email from Hinman’s speech and some recordings of meetings between SEC officials and third parties.
An email with a draft of former CFO Hinman’s 2018 speech is on the list of documents to be handed over. Hinman gave a speech in June 2018, telling an audience at a conference that he believed Ethereum was not a security.
The speech was hailed as a key one for the crypto industry, given that the first 60 million Ether (the native token of the Ethereum blockchain) was sold to raise funds for the Ethereum Foundation. Ether is now generally regarded as a commodity in the US, and the Commodity Futures Trading Commission oversees cryptocurrency-based derivative products.
Hinman’s speech reflected his own views, and the judge referred to this in her decision:
“Personal views of agency employees are not protected by the privilege unless they involve ‘formulating or exercising a political judgment’,” the judge’s ruling reads on page 23. “…Accordingly, e-mails relating to speeches or drafts are neither preliminary nor deliberative documents entitled to protection from disclosure.”
While an email with a draft of the speech must be handed over, a separate email sent by the Office of the General Counsel for Corporate Finance the day before his speech does not need to be handed over, the judge wrote.
“Documents relating to the SEC staff’s legal review of XRP contained the preliminary opinions of SEC staff during the Enforcement Division’s investigation of XRP and did not constitute a recommendation to the SEC,” she said.
These documents were prepared for the XRP investigation and therefore qualify as “preliminary and deliberative legal analysis, which is protected by the privilege of the deliberative process.”
The judge ruled that the SEC is also not required to transfer records of meetings between SEC and Ripple employees, as well as records of interagency discussions.
Other documents the SEC will retain privilege over include communications between SEC head of cryptography Valerie Szczepanik and the US Treasury Department office, as well as a presentation she made to former SEC commissioner Michael Pivovar.
In total, Ripple requested access to 14 records and three additional documents.
“The Securities and Exchange Company is also ordered to review its privilege book and release, in whole or in part, any documents previously held under the privilege that are inconsistent with this order,” Judge Netburn wrote.
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