Scribd Logo
Upload

Welcome to Scribd!

  • Gov Uscourts Nysd 551082 194 0

    Uploaded by

    ForkLog
    11K views3 pages
    The court denied the Defendants' motion to compel the SEC to withdraw foreign discovery requests and produce related documents. The court found that the SEC's use of foreign requests for assistance was permissible and not an overreach of the court's jurisdiction, as the requests were made pursuant to valid international agreements. However, the court ordered the SEC to produce documents obtained through the requests, as well as copies of past and future requests, to improve transparency.

    Original Description:

    Ripple_SEC

    Original Title

    gov.uscourts.nysd.551082.194.0

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The court denied the Defendants' motion to compel the SEC to withdraw foreign discovery requests and produce related documents. The court found that the SEC's use of foreign requests for assistance was permissible and not an overreach of the court's jurisdiction, as the requests were made pursuant to valid international agreements. However, the court ordered the SEC to produce documents obtained through the requests, as well as copies of past and future requests, to improve transparency.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    11K views3 pages

    Gov Uscourts Nysd 551082 194 0

    Uploaded by

    ForkLog
    The court denied the Defendants' motion to compel the SEC to withdraw foreign discovery requests and produce related documents. The court found that the SEC's use of foreign requests for assistance was permissible and not an overreach of the court's jurisdiction, as the requests were made pursuant to valid international agreements. However, the court ordered the SEC to produce documents obtained through the requests, as well as copies of past and future requests, to improve transparency.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    of 3

    Case 1:20-cv-10832-AT-SN Document 194 Filed 05/19/21 Page 1 of 3

    UNITED STATES DISTRICT COURT


    SOUTHERN DISTRICT OF NEW YORK
    -----------------------------------------------------------------X 5/19/2021

    SECURITIES AND EXCHANGE COMMISSION,

    Plaintiff, 20-CV-10832 (AT)(SN)

    -against- ORDER

    RIPPLE LABS, INC., et al.,

    Defendants.

    -----------------------------------------------------------------X

    SARAH NETBURN, United States Magistrate Judge:

    The Defendants move the Court for an order directing the Securities and Exchange

    Commission (“SEC”) to withdraw its foreign Requests for Assistance (the “Requests”), to stop

    further discovery through such Requests, and to produce all previously served Requests and any

    related communications with foreign regulators. The motion is DENIED.

    The Court assumes the parties’ familiarity with the issues. The SEC is a signatory to the

    Multilateral Memorandum of Understanding and other bilateral agreements that promote

    information sharing among foreign nations. These agreements permit the SEC to request

    information from foreign securities regulators, who may decline the Requests—which has

    happened in response to a few of the SEC’s Requests in this case—or it may agree to facilitate

    the production of documents from foreign entities under the foreign regulator’s jurisdiction. 1

    The SEC represents that this cross-border cooperation is critical to its mission of protecting the

    investing public and maintaining fair and transparent global markets.

    1
    The parties dispute whether a foreign business’s compliance with a Request is compulsory; that dispute
    is immaterial here and does not control the outcome of the motion.
    Case 1:20-cv-10832-AT-SN Document 194 Filed 05/19/21 Page 2 of 3

    The Defendants argue that use of the Requests is improper because (i) they operate

    outside of the scope of the Federal Rules of Civil Procedure, letters rogatory, and Hague

    Convention processes for obtaining foreign discovery, and (ii) their effect is to intimidate or

    harass the Defendants’ foreign business partners. No evidence suggests that the SEC issued its

    Requests in bad faith. As such, the Court examines the first point only.

    According to the Defendants, the Requests operate outside this Court’s and our foreign

    counterparts’ supervision, which is to say that there does not appear to be a mechanism for a

    foreign business entity to challenge the scope or propriety of a Request. They note that the

    relevant MOUs do not require notice of the Requests to any interested party, and compare the

    Requests to SEC administrative subpoenas, which all parties agree could not be used now that

    the SEC has commenced litigation. Finally, Defendants contend that the SEC should be

    compelled to seek foreign discovery through the Hague Convention process, just like any other

    litigant, as opposed to the Request process which is available only to the SEC.

    Notwithstanding all of this, the Court concludes that the SEC’s use of the Requests is

    permissible and not an afront to the Court’s jurisdiction. There has been no argument that the

    Requests exceed the scope of any governing bilateral agreement. Instead, courts have routinely

    rejected the proposition that the Hague Convention is the exclusive or priority means of

    conducting foreign discovery. See Société Nationale Industrielle Aérospatiale v. United States

    Dist. Court of Iowa, 482 U.S. 522 (1987); First Am. Corp.v. Price Waterhouse LLP, 154 F.3d 16

    (2d Cir. 1998). The only court to address the question presented here concluded that the SEC

    may issue Requests to gather foreign discovery during a pending civil litigation. See Sec. and

    Exchange Comm. v. Badian, No. 06-2621, at ECF No. 112 (S.D.N.Y. Aug. 13, 2009), affirmed

    at ECF No. 144 (S.D.N.Y. May 11, 2010).

    2
    Case 1:20-cv-10832-AT-SN Document 194 Filed 05/19/21 Page 3 of 3

    Furthermore, the fact that this discovery tool is one-sided does not render it unlawful;

    parties to litigation routinely experience imbalances in resources or otherwise. Indeed, Rule 1

    makes clear that the rules are intended to ensure the “just, speedy, and inexpensive determination

    of every action and proceeding.” Fed. R. Civ. P. 1. The SEC’s MOU process allows the agency

    to quickly and inexpensively obtain information that might otherwise slow this case to a halt.

    Against this backdrop, the Court declines to preclude the SEC from acting within the

    scope of the MOU authority. This does not mean, however, that this Court is without a role in the

    discovery sought by the SEC through the Requests. As discussed during oral argument, the SEC

    may be precluded from introducing discovery obtained through the Requests if it had not been

    previously disclosed, or if the Defendants can establish its inadmissibility on some other ground.

    Accordingly, the Defendants’ motion is DENIED. The SEC is ordered to produce all

    documents obtained in response to the Requests. In addition, to improve transparency in the

    process, the SEC is ordered to produce copies of all previously served Requests within 14 days

    and produce any subsequent Requests within 14 days of their service. To the extent the SEC

    believes it has a proper claim of privilege, it must simultaneously produce a privilege log.

    The Clerk of Court is respectfully requested to deny the motion at ECF No. 121.

    SO ORDERED.

    Dated: New York, New York


    May 19, 2021

    You might also like