The ongoing legal battle between Ripple and the Securities and Exchange Commission (SEC) has taken a new turn, as the SEC recently filed a response to Ripple’s motion to strike the declaration of Andrea Fox, an SEC accountant.
The crux of the issue lies in Fox’s role. Ripple argues that it constitutes undisclosed expert testimony. The company claims Fox’s role exceeds that of a standard summary witness the SEC claims she is and believes she provides expert analysis by interpreting financial records and making subjective decisions about categorizing expenses and revenues.
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The SEC vigorously counters this argument. The SEC’s filing, which prominent lawyer James K. Filan (@FilanLaw) shared on X, emphasizes that the Fox Declaration is a standard summary evidence permissible under Federal Rule of Evidence 1006. This rule allows for the presentation of straightforward calculations based on documented data, aiding the court in comprehending complex financial information.
The SEC maintains that Fox’s work solely involves summarizing Ripple’s financial records, such as audited statements and profit and loss reports. They underline that her role does not involve expert opinion or specialized knowledge.
The SEC directly addresses Ripple’s accusations that Fox’s calculations rely on her interpretations and assumptions regarding XRP sales. They argue this is standard practice for summary witnesses who must analyze and synthesize vast amounts of data.
The SEC cites legal precedents to support its position, highlighting that assumptions are acceptable as long as they are disclosed and logically derived from the data being summarized.
The SEC filing further clarifies the distinction between expert witnesses and summary witnesses in the context of Federal Rule of Civil Procedure 26(a)(2). This rule mandates the disclosure of expert witnesses who offer specialized knowledge to the court. The SEC asserts that Fox doesn’t meet this criteria.
They emphasize that she neither provides opinions nor utilizes specialized knowledge in her analysis. Additionally, they point out that she lacks firsthand knowledge of the disputed facts, further solidifying their position that she is not an expert witness.
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Despite the SEC’s arguments, pro-XRP lawyer Bill Morgan remains skeptical of the SEC’s stance on investor protection. He argues that the SEC’s focus seems misplaced, suggesting that the case, rather than protecting investors, appears more concerned with the potential for higher profits that investors might have missed.
However, the Govil ruling has hampered the SEC’s case as the regulator cannot prove that investors suffered harm. This might explain the SEC’s apparent shift in focus, pointed out by Morgan.
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