Judge Rejects Ripple-SEC Settlement Motion Due to Procedural Error

Ripple Labs and the U.S. Securities and Exchange Commission (SEC) encountered an unexpected setback in their settlement negotiations when Judge Analisa Torres rejected their joint motion due to a procedural error involving Rule 62.1. This misstep has raised questions about the future of the settlement and the legal strategies employed by both parties.
Legal expert Bill Morgan has highlighted the potential implications of this decision. The original settlement agreement referenced Rule 62.1, which allows courts to provide an indicative ruling when a case is on appeal. However, Rule 60 is used to ask a judge to change or cancel a final judgment, which is what both sides are now seeking. Morgan suggests that the denial of the Rule 62.1 motion could force Ripple and the SEC to refile under Rule 60, which permits a court to relieve a party from a final judgment under exceptional circumstances.
One of the critical issues Morgan pointed out is whether a new motion under Rule 60 would require another vote from the five SEC commissioners. The previous vote specifically approved a process using Rule 62.1. If the legal path changes, it’s unclear whether the original vote still holds or if a fresh round of approval is needed from the commission. This adds another layer of complexity to the settlement process.
Morgan also questions whether the failure to get an indicative ruling under Rule 62.1 fundamentally disrupts the settlement. The agreement’s operative clauses are tied to the recitals, which describe the overall terms, but there’s no clear backup plan in the event the Rule 62.1 motion fails. This raises doubts about whether the settlement can proceed at all without rewriting or renegotiating key parts.
Morgan doubts that experienced attorneys on both sides simply forgot about Rule 60. He suggests they may have chosen Rule 62.1 on purpose to avoid the tougher task of proving “exceptional circumstances,” which Rule 60 demands. This strategic choice could now complicate the road ahead for Ripple and the SEC.
In summary, while Ripple and the SEC seem ready to move toward settlement, Judge Torres has made it clear they must follow the rules closely. This procedural error could complicate the road ahead, potentially forcing renegotiation or delay of the settlement entirely. The legal drama between Ripple and the SEC continues, with the outcome still uncertain.

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