The US Securities and Exchange Commission faced another setback in court on 19 December 2023, regarding its rule on share repurchase data. This follows the SEC's previous legal losses in cryptocurrency cases, including Ripple's partial victory in the XRP lawsuit.
Judge Jerry E. Smith of the United States Court of Appeals for the Fifth Circuit ruled in favor of granting the motion and vacating the rule that required issuers to report day-to-day share repurchase data every quarter.
The US Securities and Exchange Commission adopted amendments on 3 May 2023, regarding disclosure requirements for securities repurchases. These amendments included the provision of daily repurchase activity on a quarterly or semi-annual basis, depending on the issuer's type.
Earlier, on 31 October 2023, the court issued an opinion in response to the petition filed by the US Chamber of Commerce against the new rule. The court stated that the US Securities and Exchange Commission had acted arbitrarily and capriciously, violating the Administrative Procedure Act.
Additionally, it noted that the SEC had failed to respond to petitions and neglected to conduct a cost-benefit analysis. In the latest order, Judge Smith granted the motion to vacate the rule as the SEC's time to respond or oppose had expired.
A panel of judges in the US Court of Appeals for the District of Columbia Circuit found the SEC's refusal to approve Grayscale's spot Bitcoin ETF unjustifiably random and thoughtless in the Grayscale lawsuit.
They critiqued the SEC's inconsistency in approving Bitcoin futures ETFs and stressed that the US Securities and Exchange Commission overlooked the financial and mathematical connection between spot and futures markets. Consequently, the judges ruled in favor of Grayscale's request to review the denial of the spot Bitcoin ETF approval.
Ripple's chief legal officer, Stuart Alderoty, has voiced his concerns about the series of legal defeats that the United States Securities and Exchange Commission has encountered under Gary Gensler's leadership.
Alderoty considers this trend to be alarming, as it suggests that the US Securities and Exchange Commission is deviating from its duty to abide by the law. He expressed apprehension regarding the SEC's repeated arbitrary and capricious moves in court cases, which points to a worrisome pattern under Gensler's tenure.
Alderoty raised serious concerns about a disturbing pattern emerging under the leadership of SEC Chair Gary Gensler, describing it as a deeply troubling trend that deviates from the agency's promise to uphold the law. Specifically, Alderoty highlighted the SEC's recurring instances of arbitrary and capricious behavior in court cases, expressing worries about the implications of this pattern.
The commission has been given a chance by the court to showcase its careful examination of relevant issues and establish a solid foundation for its decision. This occurrence comes after the US Securities and Exchange Commission faced setbacks in the XRP lawsuit and the Grayscale filing, which could have implications for the regulatory future of the crypto industry.
The court's discoveries have drawn focus to the SEC's enforcement strategies and the level of transparency in the realm of digital assets. As these legal conflicts unfold, experts in the field are keeping a close watch on how they will impact the formation of future regulatory structures for cryptocurrencies and associated investment products in the US.
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