The Supreme Court agrees with Ripple and approves of the adapted rules in the SEC case
Legal experts continue to speculate as to the possible result of the high-stakes summary judgement in the legal struggle between Ripple and the Securities and Exchange Commission (SEC).
While the outcome of the case is still up in the air, the lessons to be learned from prior cases involving comparable companies may provide useful pointers towards a favourable settlement.
In the tweet from May 19th, Ripple’s chief legal officer Stuart Alderoty discussed a major new discovery that has the potential to alter the way securities laws are interpreted in the digital era.
Alderoty brought up a recent Supreme Court ruling on Twitter, stressing the need of updating precedent to account for changes in the modern world. This understanding is consistent with the essence of Ripple’s argument, which is that the Howey test and the related act should be understood in accordance with the common law.
Since this recognition came from the highest court, it may be assumed that Ripple considers it a significant endorsement that strengthens its stance.
Ripple’s main legal contention is that in order to satisfy the Howey test’s definition of an “investment contract,” a contract must be in place between the buyer and seller that specifies the buyer’s post-sale rights and the seller’s post-sale duties.
Ripple contends that the SEC lacks jurisdiction over XRP because of the impact of common law on legal interpretation.
Finbold reports that Alderoty had criticised the SEC’s stance on the “common enterprise” concept, citing the regulator’s failed argument in the 1946 Supreme Court “Howey” case.
However, the Supreme Court disagreed with the SEC and held that a “common enterprise” was not necessary if a “community of interest” existed. Alderoty emphasised that the SEC has been wrong about XRP in the past and is wrong again.