In a scathing statement today, Ripple (CLO) chief legal officer Stuart Alderoty criticized SEC Chairman Gary Gensler following the court’s recent ruling, which Alderoty highlighted as an indication of regulatory overreach. As pointed out by Alderoty, the US Securities and Exchange Commission (SEC) has unconstitutionally repealed the rule on proxy advisory firms, an action directed by Gensler that did not comply with the Administrative Procedure Act.
Ripple CLO Celebrates Gensler’s Latest Defeat
Alderoty’s statement was released by X, where he noted, “Another court is criticizing the SEC. This is the time to illegally withdraw the law for companies that advise representatives without complying with the Administrative Procedure Act. The court explained that Gensler was the one who directed this illegal action. National Association of Manufacturers v. SEC.”
Ripple’s CLO also shared a screenshot from the decision that explains the sequence of events that led to the repeal of the rule. The ruling states, “The SEC withdrew it in November 2021,[…]. The impeachment process began immediately after the SEC’s new chairman, Defendant Gary Gensler, took office. In June 2021, Chairman Gensler directed his staff to reconsider the 2020 Act and suspended its implementation for the time being.
The cited court decision, a ruling from the 5th US Circuit Court of Appeals, overturned the SEC’s rollback of the 2020 rules, originally established during the Trump administration to ensure transparency and accountability for proxy voting advice. The court unanimously found the SEC’s process to revoke these rules to be “unreasonable and unreasonable and therefore illegal,” specifically criticizing the agency for not adequately supporting its decision.
The court’s decision focused on rules that required participating firms such as Institutional Shareholder Services and Glass Lewis to notify companies of their voting advice at the same time as their clients, and provide a way for the companies to respond. These requirements were intended to improve the transparency and fairness of proxy voting, an important part of corporate governance.
In his June 2021 statement, Chairman Gensler defended the rollback, saying it was intended to promote “timeliness and independence of proxy voting advice, which will help protect investors and facilitate shareholder democracy.” However, the court’s decision casts doubt on the SEC’s handling of the rule change, particularly in terms of due process and rational justification.
The SEC is currently reviewing the court’s decision, with an agency spokesman saying the regulator is determining its next steps in response to the court’s allegations. This decision is yet another case of lawlessness by the SEC under Chairman Gensler being overturned. The US crypto industry and Ripple can tell a thing or two about it.
Just yesterday, Ripple CLO hit Gensler with an X after the SEC chairman made new comments in a discussion about recent court decisions. Alderoty noted, “Watch out Gary Gensler: Courts don’t “fix”…they find you broke the law by exceeding your legal authority.”
At press time, XRP traded at $0.47244.
Featured image from Shutterstock, chart from TradingView.com
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