Ripple v. SEC: The FINAL End Date is In! AND Att'y Hogan Tells You All About Att'y/Client Privilege.

Flashback. Absent something very surprising or a the Ripple v. SEC case isn't going to be decided judicially until at least August 2022 and more likely in September of this year. So the Ripple judge just released the summary judgment briefing schedule. Final briefs are not due until November. November 15. Jeremy where are you? We need to Apparently Jeremy was a little out to sea on the September prediction he made a couple months ago so I'm going to take over for the next 10 minutes but don't worry I'm usually the more accurate one and that is because we now have an actual scheduling order and so I being the smarter one will go over the actual scheduling order when the Ripple case will actually end and then we will go over the latest attempt by the SEC to hide the infamous Hinman emails and that was in form of a So let's get started. According to the court order the parties were ordered to submit a proposed schedule as to when motions for summary judgment must be filed. A proposed schedule order is when both parties get together and compromise on a schedule. Down here in Florida this is not a common practice. Usually down here in Florida the judge just tells parties when things are due but apparently this is how things are done up in New York. So the parties filed the proposed scheduling order on April 22nd and here is what it says. Motions for summary judgment and motions to exclude expert testimony must be filed by August 2, 2022. And then skipping a couple lines replies to any opposition must be filed by December 20, 2022. So the last summary judgment filing would have been the end of December which definitely would have put the final case decision well into 2023. Yes 2023. However this was the party's suggested scheduling and normally courts will just rubber stamp these suggestions and adopt them in an order. But a couple days later we got a surprise order from the judge on the case and she basically said nope we're gonna make this happen faster and we got this. There at the top you can see that the judge orders that the motions to exclude expert witnesses will be completely briefed by August 30, 2022. And then in paragraph two that the summary judgment briefs will be due by November 15, 2022. So surprise the judge knocked over a month off the agreed schedule and not only that the parties wanted to submit 90 page briefs in their proposed schedule and Judge Torres limited the parties to 75 pages which led Jeremy to tweet this on Twitter. Judge Torres has moved up the schedule for summary judgment briefs to November 15. What do I take from that? She wants the Ripple versus SEC case over before Christmas. Not only did she move up the deadline but she also limited the lengths of the briefs from 90 pages down to 75. That is still a lot of work for the judge to look through 70 page brief and familiarize herself with 15 expert witness reports and all. But at the end of the day she can and has turned around a summary judgment that quickly before. But timing how long a judge will take to rule on something is at the that would likely push back judgment on the case. Or for example if there is an appeal pending on a discovery issue that could delay things. But what we know for sure is that the judge won't be ruling on the case in September. A judicial ruling is not coming until December and possibly even early 2023. Which brings us of course to the completely baffling Hinman emails and the SEC's death quest to protect these emails at any cost. And with the deliberative process privilege argument not going well for the SEC it just filed a motion to not produce the Hinman speech emails and argue that the emails are also protected by attorney-client privilege. It's interesting to note that at this point time the SEC has spent more time and effort trying to protect these emails than any other issue in this litigation. Including fighting over things like whether XRP is a security or not. Interesting. In any case here is the motion and what the SEC is asking the court. The SEC renews its assertion that the attorney-client privilege protects internal documents related to a June 14, 2018 speech delivered by Bill Hinman, the then director of the SEC's Division of Corporate Finance. So where did this come from? The SEC raised attorney-client privilege back in August 2021 and it sat dormant pending resolution of the deliberative process privilege argument since then. It's almost like the SEC kept this argument in its back pocket in case the deliberative privilege argument didn't go well for it. Which it hasn't at all. The attorney-client privilege is the oldest and most important privilege in law and is meant to protect communications between you and your lawyer so what you tell your lawyer can't be used against you. The test for what is covered is simple. Attorney-client privilege covers communications, one, between you and your lawyer, two, that are confidential, and three, which communications constitute legal advice. I used to work for a law firm that represented California cities and this issue was of course important to us and working for a government agency can cause confusion about the first part of the test. Who is the client? And that is the first thing that the SEC is going to struggle with in this motion. First off, the SEC has taken no less than three positions on whose opinion the speech was. So back in August of last year when the attorney-client privilege was first raised, it was the SEC's opinion, then it later became Mr. Hinman's personal opinion, then it finally became the division's opinion. And now we might understand the strategy behind that because in arguing its motion the SEC characterizes the first group of emails as being legal guidance from within the division itself. The first 23 entries listed on attachment one to the motion reflect drafts that these attorneys exchanged among themselves with Director Hinman and with CorpFin attorneys who held responsibility for digital assets. So the SEC is trying to say that the first 23 emails are all emails from the division's lawyers only and that the argument here is that the division itself is the client and anything that's said within the division is attorney-client privilege. The problem the SEC is going to run into is that the court has already taken a hard position that Mr. Hinman's speech was his personal opinion. And as the SEC admits in its motion, Mr. Hinman had a personal attorney, Michael Seaman, and attorney Seaman was also involved in advising Mr. Hinman on the speech. If Director Hinman had his own personal lawyer to advise him, were the other numerous lawyers who emailed him about the speech also his attorneys? There's a case called Baxter vs. Reed which gives some insight for us and in that case the attorney for the city met with two council members and also two people from the fire department to talk about a lawsuit. And the court said that the inclusion of the people from the fire department stopped attorney-client privilege from applying. That will likely be something Ripple will be arguing on the first prong of the test. But the bigger problem for the SEC is the third prong which asks whether legal advice was provided in the emails. When going into this discussion in its motion, the SEC hesitates a little. Entries 1 to 23 analyze the application of the securities law to digital assets, a primary legal issue. The exchange of those drafts among court finment attorneys allowed them to provide the type of advice that can be rendered only by consulting the legal authorities. That's about as detailed as the SEC gets in arguing that legal advice was given and that's a problem for its argument especially in the context that the speech was Hinman's personal opinion. If the email exchanges were simply what do you think about this speech and the attorneys discuss whether it accurately reflects the application of the Howey test to digital assets, that's not the kind of legal advice covered by attorney-client privilege. The kind of thing in the emails which would make it attorney-client privilege would be for example if an attorney told Mr. Hinman he should remove a part of the speech because the SEC rules don't allow him to disclose certain information. That might be attorney-client privilege. But even then that begs the question why didn't his personal lawyer give him that legal advice? But I think if the emails are just general discussions about applying Howey to digital assets that is not attorney-client privilege. The privilege can't be stretched that far. Ripple on the other hand will have a difficult time arguing this motion because it doesn't know exactly what is in the emails because it hasn't seen them and will have to rely on the judge to apply the law correctly upon review. This issue will be playing out over the next month and as you see it come up remember to ask 1. Was Hinman even the client? And 2. Was there legal advice given or was it just general legal discussion? That second question is likely what the decision will hinge on. As always thanks for watching and yes Mr. Crown for XRP on Twitter. I will definitely take you up on your offer for tamales for doing this video. I work for tamales any day. Yummy!