SEC’s Illegal Rule Rescission: Ripple’s Legal Team Raises Concerns
The Securities and Exchange Commission (SEC) has found itself in hot water again, this time for illegally rescinding a rule without following proper procedures. The court documents reveal that SEC Chairman Gary Gensler personally directed this move, which has drawn criticism from Ripple’s legal team and other industry leaders.
Proxy Advisory Firms Rule: A Background
In 2020, the SEC implemented a rule aimed at increasing transparency and accountability for proxy advisory firms. These firms provide recommendations to investors on how to vote their shares in company elections. The rule required proxy advisory firms to share their recommendations with target companies simultaneously as they shared them with clients, disclose potential conflicts of interest, and allow companies to review and respond to the recommendations before they were finalized.
SEC’s Rescission of the Rule
In November 2021, just one month before the rule was set to take effect, the SEC abruptly rescinded it. The documents indicate that the rescission process started shortly after Gensler became SEC Chairman in June 2021. Gensler directed his staff to reconsider the rule and suspended its enforcement in the interim.
Ripple’s Legal Team’s Criticism
Ripple’s Chief Legal Officer, Stuart Alderoty, has been vocal in his criticism of the SEC’s actions. He highlighted that the rescission was done without adhering to the Administrative Procedure Act, which outlines the process for agencies to create and modify rules. Alderoty pointed out that Gensler personally directed this illegal move.
Pressure on SEC and Gensler
Ripple’s legal team is not alone in its concerns. The broader crypto industry and even traditional industry groups are questioning SEC’s regulatory approach and leadership under Gensler. The rescission of the proxy advisory firms rule, along with other recent actions by the SEC, has raised concerns about the agency’s fairness and consistency.
Conclusion
The SEC’s illegal rescission of the proxy advisory firms rule is a serious breach of procedure that has raised concerns among industry leaders and legal experts. Ripple’s legal team has been critical of the SEC’s actions, adding to the pressure on the agency and Gensler. It remains to be seen how the SEC will respond to these criticisms and the potential consequences of its illegal actions.