“Wow! You can’t make this up.”
The Securities and Exchange Commission has objected to the court’s multiple orders compelling the plaintiff to produce its privileged internal communications.
The wider public following the case has been commenting, namely via Twitter, on a new 180º turn after previously arguing the Hinman speech was his personal opinion and then that it was market guidance. Now, the SEC explains why the market guidance is not binding.
The letter filed by the SEC outlines the nature of Hinman’s speech, complains about the court’s rationale and warns of the chilling effect this order has on government employees.
“If permitted to stand, the Orders would chill the ability of government employees to deliberate about important policy issues and obtain candid legal advice from agency lawyers. The Orders should be set aside as clearly erroneous and contrary to law, and the SEC should be permitted to withhold the Speech Drafts because they are both irrelevant and privileged”, the government agency concluded.
The SEC believes the court’s focuses too much on Hinman’s disclaimer before the speech: “My remarks are mine alone, not necessarily those of the Commission, the Commissioners, or the staff.”
The orders’ central holding is that “because of that disclaimer and statements based on the disclaimer, the Speech and communications relating to its preparation were not agency deliberations and, consequently, the Speech Drafts are not privileged. This finding is contrary to law and based on clearly erroneous characterizations of the factual record”, the agency continued.
The plaintiff added that the orders assume that, if a speech does not convey official agency policy (because a majority of Commissioners has not voted to approve its content), it is therefore “personal” and cannot be agency business.
“But senior officials at the SEC and other agencies routinely give speeches that provide meaningful information to the public about staff approaches to legal and policy issues, even if those approaches do not formally bind the agency itself”.
In the letter, the SEC seems to have made a new description of the nature of Hinman’s speech. XRP friendly attorney Jeremy Hogan called it a “4th iteration” as noted the plaintiff now calls it guidance to market participants, but only from Hinman’s division of enforcement and not binding on the SEC.
Wow! You can’t make this up.
We now have a 4th iteration of what the speech was.
In the objection to Torres, the speech is now “guidance” to market participants, but only from Hinman’s division of enforcement and not binding on the SEC.
— Jeremy Hogan (@attorneyjeremy1) July 26, 2022
“Director Hinman’s Speech, which he gave while he was the head of Corp Fin, provided guidance to market participants about how staff in that SEC division would analyze whether offers and sales of digital assets constitute securities under Supreme Court precedent”, said the SEC.
“The Speech was not binding SEC policy—that is, a pronouncement of the Commission itself, the Commissioners appointed by the President with the Senate’s advice and consent. Rather, Director Hinman, while the head of an SEC division, developed the Speech in consultation with other SEC offices and divisions as part of the SEC’s larger discussions about the application of the securities laws to digital assets.
“Indeed, Director Hinman consulted over many weeks with dozens of SEC attorneys, several of whom reviewed and revised multiple versions of the Speech. During the Speech, Director Hinman stated that it contained his personal views—a disclaimer required by SEC regulation to ensure that market participants did not attribute his views to the Commission, and similar to disclaimers that officials from other federal agencies provide when giving speeches.