Bitrabo Editorial
Stuart Alderoty, the Chief Legal Officer of Ripple, strongly criticized SEC Chairman Gary Gensler in response to a recent court ruling that highlighted regulatory overreach. The US Securities and Exchange Commission (SEC) was noted for unlawfully revoking a rule concerning proxy advisory firms, a decision influenced by Gensler that did not comply with the Administrative Procedure Act.
Ripple’s CLO Reacts to Gensler’s Legal Defeat
Alderoty’s statement, shared on X, expressed his view on the court’s decision: “Another court criticizes the SEC for unlawfully revoking a rule on proxy advisory firms in violation of the Administrative Procedure Act. The court points out that this illegal action was personally directed by Gensler in the case National Association of Manufacturers v. SEC.”
Ripple’s CLO also revealed details from the court ruling outlining the events that led to the rule’s revocation. The ruling highlighted how Chairman Gensler initiated the process to reconsider the 2020 rule shortly after assuming office and suspended its enforcement in the interim.
The court ruling, issued by the 5th US Circuit Court of Appeals, invalidated the SEC’s reversal of the 2020 rules established during the previous administration to ensure transparency in proxy voting advice. The court criticized the SEC’s decision as “arbitrary and capricious,” emphasizing the agency’s failure to provide sufficient justification for the rollback.
The focus of the ruling was on rules that required proxy firms to disclose their voting advice to companies and provide a mechanism for companies to respond simultaneously to their clients. These requirements aimed to enhance transparency and fairness in proxy voting, crucial for corporate governance.
In contrast, Chairman Gensler justified the rollback in June 2021, citing its benefits in promoting timely and independent proxy voting advice to protect investors and enable shareholder democracy. However, the recent court ruling questions the SEC’s procedural compliance and rationale behind the rule change.
The SEC is currently evaluating the court’s decision, contemplating its next steps following the judicial rebuke. This ruling marks another instance of regulatory actions by the SEC under Chairman Gensler being overturned, reflecting challenges faced by the US crypto industry and Ripple.
Alderoty also criticized Gensler’s recent remarks following the court rulings, emphasizing that the courts are enforcing the law and preventing the chairman from exceeding his authority. XRP was trading at $0.47244 at the time of reporting.