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Case 1:20-cv-10832-AT-SN Document 465 Filed 04/11/22 Page 1 of 11
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`SECURITIES AND EXCHANGE COMMISSION,
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`Plaintiff,
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`-against-
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`RIPPLE LABS, INC., et al.,
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`Defendants.
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`SARAH NETBURN, United States Magistrate Judge:
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`04/11/2022
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`20-CV-10832 (AT) (SN)
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`OPINION & ORDER
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`By letter motion, the Securities and Exchange Commission (“SEC”) moves for partial
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`reconsideration or clarification of the Court’s January 13, 2022 Order, which held in relevant
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`part that emails concerning and draft versions of a June 14, 2018 speech given by then-Director
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`William Hinman (the “Speech”) are not shielded by the deliberate process privilege. The motion
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`is DENIED as to reconsideration and GRANTED as to clarification.
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`BACKGROUND
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`The Court assumes the parties’ familiarity with the facts. The SEC brings this action
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`under Section 5 of the Securities Act of 1933, alleging that Defendants Bradley Garlinghouse,
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`Christian Larsen, and Ripple Labs Inc. (collectively “Defendants”) are currently engaging in the
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`unlawful offer or sale of securities, and that Defendants Larsen and Garlinghouse aided and
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`abetted Ripple’s violations.
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`As relevant here, Defendants sought certain documents from the SEC to challenge the
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`SEC’s allegations that Larsen and Garlinghouse were objectively reckless in believing that XRP
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`

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`Case 1:20-cv-10832-AT-SN Document 465 Filed 04/11/22 Page 2 of 11
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`was not a security and that Ripple was on “fair notice” that XRP was a security. Following the
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`Court’s ruling on the relevance of certain categories of documents, the SEC searched its files and
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`raised objections to the production of certain challenged documents on the ground that they are
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`protected by the deliberative process privilege. The Court conducted an in camera review of
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`exemplar documents identified in Appendix A to Defendants’ motion. ECF No. 289-11. Based
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`on its review of the documents, the Court granted Defendants’ motion to compel production as to
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`certain parts of Entry 1 of Appendix A, and in full as to Entry 9 of Appendix A. ECF No. 413.
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`The SEC now asks the Court to reconsider its ruling as to Entry 9 of Appendix A or, in
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`the alternative, to clarify whether the Court’s January 13, 2022 Order compels production of all
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`emails related to and drafts of the Speech on the SEC’s privilege log. In support of its motion,
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`the SEC has submitted 10 additional documents for the Court’s in camera review.1
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`DISCUSSION
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`I.
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`Reconsideration
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`A. Legal Standard
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`Reconsideration of a previous order by the court is an “extraordinary remedy to be
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`employed sparingly in the interests of finality and conservation of scarce judicial resources.” In
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`re Health Mgmt. Sys. Inc. Sec. Litig., 113 F. Supp. 2d 613, 614 (S.D.N.Y. 2000) (cleaned up);
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`
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`1 After Judge Torres denied the Individual Defendants’ motions to dismiss and the SEC’s motion to strike
`Ripple’s fair notice defense, the SEC filed a letter “supplementing” its motion for reconsideration, ECF
`No. 445, arguing that the SEC’s motion for reconsideration should be granted because the SEC’s internal
`documents are not relevant to the Individual Defendants’ scienter. The Court declines to take such a
`narrow view of relevance in the context of discovery. “Although not unlimited, relevance, for purposes of
`discovery, is an extremely broad concept.” Condit v. Dunne, 225 F.R.D. 100, 105 (S.D.N.Y. 2004)
`(citation omitted); see Daval Steel Prod., a Div. of Francosteel Corp. v. M/V Fakredine, 951 F.2d 1357,
`1367 (2d Cir. 1991) (citing cases).
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`2
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`

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`Case 1:20-cv-10832-AT-SN Document 465 Filed 04/11/22 Page 3 of 11
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`Anwar v. Fairfield Greenwich Ltd., 164 F. Supp. 3d 558, 560 (S.D.N.Y. 2016) (same). 2 The
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`decision to grant or deny such a motion is “committed to the sound discretion of the district
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`court.” Wilder v. News Corp., No. 11-cv-4947 (PGG), 2016 WL 5231819, at *3 (S.D.N.Y. Sept.
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`21, 2016) (quoting Liberty Media Corp. v. Vivendi Universal. S. A., 861 F. Supp. 2d 262, 265
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`(S.D.N.Y. 2012)). “The reconsideration rule must be ‘narrowly construed and strictly applied so
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`as to “avoid duplicative rulings on previously considered issues.”’” Sigmon v. Goldman Sachs
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`Mortg. Co., 229 F. Supp. 3d 254, 257 (S.D.N.Y. 2017) (quoting Merced Irrigation Dist. v.
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`Barclays Bank PLC, 178 F. Supp. 3d 181, 183 (S.D.N.Y. 2016)).
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`The standard for granting a motion for reconsideration “is strict, and reconsideration will
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`generally be denied unless the moving party can point to controlling decisions or data that the
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`court overlooked—matters, in other words, that might reasonably be expected to alter the
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`conclusion reached by the court.” Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995).
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`“[A] party may not advance new facts, issues, or arguments not previously presented to the
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`Court” on a motion for reconsideration. Nat’l Union Fire Ins. Co. of Pittsburgh, PA. v. Stroh
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`Companies, Inc., 265 F.3d 97, 115 (2d Cir. 2001) (quoting Polsby v. St. Martin’s Press, Inc., No.
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`97-cv-690 (MBM), 2000 WL 98057, at *1 (S.D.N.Y. Jan. 18, 2000)). Nor are motions for
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`reconsideration “a vehicle for relitigating old issues, presenting the case under new theories,
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`securing a rehearing on the merits, or otherwise taking a second bite at the apple.” Analytical
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`Survs., Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012), as amended (July 13, 2012)
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`(quoting Sequa Corp. v. GBJ Corp., 156 F.3d 136, 144 (2d Cir. 1998)) (cleaned up); Schrader, 70
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`
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`2 Because the standards for motions brought under Local Civil Rule 6.3 and Federal Rule of Civil
`Procedure 59(e) are “identical,” the Court considers case law arising under both. Sigmon v. Goldman
`Sachs Mortg. Co., 229 F. Supp. 3d 254, 256 (S.D.N.Y. 2017) (citing cases).
`3
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`

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`Case 1:20-cv-10832-AT-SN Document 465 Filed 04/11/22 Page 4 of 11
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`F.3d at 257 (“[A] motion to reconsider should not be granted where the moving party seeks
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`solely to relitigate an issue already decided.”).
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`Reconsideration may be granted because of “an intervening change of controlling law,
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`the availability of new evidence, or the need to correct a clear error or prevent manifest
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`injustice.” Luv n’ Care Ltd. v. Goldberg Cohen, LLP, No. 15-cv-9248 (NRB), 2016 WL
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`6820745, at *1 (S.D.N.Y. Nov. 10, 2016) (internal quotation marks omitted) (quoting Hollander
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`v. Members of the Bd. of Regents, 524 F. App’x 727, 729 (2d Cir. 2013)); accord Virgin Atl.
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`Airways, Ltd. v. Nat’l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992). “To these ends, a
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`request for reconsideration . . . must demonstrate controlling law or factual matters put before the
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`court in its decision on the underlying matter that the movant believes the court overlooked and
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`that might reasonably be expected to alter the conclusion reached by the court.” RST (2005) Inc.
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`v. Rsch. in Motion Ltd., 597 F. Supp. 2d 362, 365 (S.D.N.Y. 2009) (emphasis added). “[A]
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`reconsideration motion cannot be used as a vehicle to make new arguments that contradict or are
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`inconsistent with a party’s earlier submission.” Wilder, 2016 WL 5231819, at *5 (citing RST
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`(2005) Inc., 597 F. Supp. 2d at 365; then citing Davidson v. Scully, 172 F. Supp. 2d 458, 461
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`(S.D.N.Y. 2001)). The strict and narrow application of the reconsideration rule “ensure[s] the
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`finality of decisions and [prevents] the practice of a losing party examining a decision and then
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`plugging the gaps of a lost motion with additional matters.” Henderson v. Metro. Bank & Tr.
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`Co., 502 F. Supp. 2d 372, 376 (S.D.N.Y. 2007) (citation omitted).
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`B. Application
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`The SEC has identified no intervening change of controlling law or any other controlling
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`decisions unaddressed by the Court’s January 13, 2022 Order.
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`4
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`Case 1:20-cv-10832-AT-SN Document 465 Filed 04/11/22 Page 5 of 11
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`The SEC claims, however, that the Court overlooked two factual issues: first, the
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`comments left by SEC staff on drafts of the Speech (as well as the drafts and the final text
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`themselves) show that Hinman made the Speech in order to communicate the approach of the
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`SEC’s Division of Corporation Finance on the regulation of digital asset offerings, as confirmed
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`by the relevant regulations governing SEC employees’ public statements. Relatedly, the SEC
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`argues that the Speech was the end-product of “significant collaboration” by many staffers across
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`the SEC, as evidenced by the 68 drafts and associated commentary in the SEC’s privilege logs.
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`Deliberations regarding the Speech’s content were, according to the SEC, an essential link in the
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`agency’s deliberations about whether transactions in a particular digital asset involve the sale of
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`a security.
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`1.
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`The Speech’s Purpose
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`The SEC’s assertion that the Speech was intended to communicate Corporation Finance’s
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`approach to regulating digital asset offerings is inconsistent with the SEC’s and Hinman’s
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`previous position that the Speech was intended to and did reflect his personal views. See ECF
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`No. 255 (SEC Letter Motion to Quash Subpoena) at 3 (“Director Hinman . . . [made] a public
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`speech on June 14, 2018, in which he expressed his own view that the offers and sales of the
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`digital asset Ether at that time were ‘not securities transactions,’ based on his understanding of
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`the specific facts and circumstances of Ether and the structure of the Ethereum blockchain at the
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`time.” (emphases added)); ECF No. 255-2 (Hinman Decl.) ¶¶ 11-13 (noting that the Speech was
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`“intended to express [Hinman’s] own personal views”); ECF 492-2 (SEC Hinman Dep. Tr.) at
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`132:9-10 (Hinman believed that the speech “provided clarity as to how [he] was looking at those
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`issues”); ECF No. 436-3 (Defs.’ Hinman Dep. Tr.) at 233:14-15, 19-20 (“The speech reflects
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`[Hinman’s] thoughts. . . . They [statements made during the speech] are intended to be a speech
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`5
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`Case 1:20-cv-10832-AT-SN Document 465 Filed 04/11/22 Page 6 of 11
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`of [his] thoughts in the space.”). The SEC may not now argue otherwise because it disagrees
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`with the Court’s conclusion. See Wilder, 2016 WL 5231819, at *5.
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`Even on the merits, the SEC’s new position is not justified. First, the Court disagrees with
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`the SEC that the text of the Speech shows Hinman’s intent to provide a “framework” for
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`Corporation Finance’s approach to evaluating digital asset offerings. Saying that SEC staff are
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`“happy to help promoters and their counsel work through these issues,” or that staff “stand
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`prepared to provide more formal or no-action guidance” does not render the Speech itself agency
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`guidance.3 To the contrary, including distinct offers of agency guidance in the Speech further
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`reinforces that the Speech itself was not intended as guidance. See also SEC Hinman Dep. Tr.
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`299:21-300:2 (“Do I disagree that it announced a new framework? I think I would quibble with
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`that a little bit. I think that’s a framework many folks were using at the time.”).
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`The 2019 publication of the SEC’s Strategic Hub for Innovation and Financial
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`Technology’s “Framework for ‘Investment Contract’ Analysis of Digital Assets” (“Framework”)
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`does not aid the SEC’s interpretation either. Setting aside that the SEC has never before argued
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`that the Speech informed the issuance of the Framework, the Framework cited the Speech in a
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`single footnote in explaining that “the framework provides additional guidance in the areas that
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`the Commission or Staff has previously addressed.” ECF No. 429-4 at 7 n.1. It is also
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`unsurprising that, in preparing topical informal guidance a year after an SEC employee’s speech
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`on that same topic area, an SEC division would include some of the speech’s language or
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`substance in the Framework—but that does not necessarily render the drafts of and emails related
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`to the original speech an essential link in the SEC’s deliberative process.
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`
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`3 Director William Hinman, Division of Corporation Finance, Remarks at the Yahoo Finance All Markets
`Summit: Crypto, Digital Asset Transactions: When Howey Met Gary (Plastic) (June 14, 2018),
`https://www.sec.gov/news/speech/speech-hinman-061418.
`6
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`

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`Case 1:20-cv-10832-AT-SN Document 465 Filed 04/11/22 Page 7 of 11
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`The SEC seeks now to minimize the fact that it has publicly disclaimed responsibility for
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`the Speech by invoking 17 C.F.R. § 200.735-4, which requires in relevant part that SEC
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`employees engaging in “outside” publications or speeches include a disclaimer of the SEC’s
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`responsibility for the employee’s views. The SEC characterizes the disclaimer as “standard,” and
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`points out that the 2019 Framework also included the disclaimer. ECF No. 429-4 at 7 n.1. The
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`SEC also refers the Court to other speeches and remarks by SEC officials which include the
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`disclaimer, as well as remarks by employees of other federal agencies. See, e.g., ECF No. 429-6
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`at 1. “But boilerplate is boilerplate for a reason—because it offers tried-and-true language to
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`ensure a precise and predictable result.” Seila L. LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct.
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`2183, 2209 (2020) (Roberts, C.J., concurring). The disclaimer’s uniform wording does not render
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`it meaningless, merely standardized. Even accepting the SEC’s characterization of Hinman’s
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`declaration as “explaining” the disclaimer, Hinman’s declaration nevertheless confirmed—under
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`oath—what the disclaimer made clear: that the speech was intended to and did reflect his
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`personal views.
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`The SEC also points to 17 C.F.R. § 202.1(d), which explains that “opinions expressed by
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`members of the staff do not constitute an official expression of the Commission’s views,” but
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`that “any statement by the director . . . of a division can be relied upon as representing the views
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`of that division.” This regulation refers not to “outside employment and activities,” like 17
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`C.F.R. § 200.735-4, but “informal procedures” that SEC staff use to “render[] advice and
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`assistance . . . to members of the public dealing with the Commission,” like interpretive and no-
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`action letters. The regulation is inapposite.
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`7
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`

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`Case 1:20-cv-10832-AT-SN Document 465 Filed 04/11/22 Page 8 of 11
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`2.
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`Deliberations Regarding the Speech’s Content
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`The SEC’s original motion argued that the privilege applied to the draft of the Speech
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`and corresponding email because Hinman was seeking feedback from other SEC staff about the
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`speech’s contents, and the staff was “deliberating on what the speech should say.” ECF No. 351
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`at 13. The SEC now proffers 10 documents in support of an argument that staff across the agency
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`engaged in substantive deliberations about the Speech’s content, and that these deliberations
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`were an essential link in the agency’s deliberations about the regulation of digital asset offerings.
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`“As these contentions were not put before the Court on the underlying motion, strict application
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`of Rule 6.3 would require denial of the motion for reconsideration. Nevertheless, the deliberative
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`process privilege . . . serve[s] important public interests,” and the Court’s analysis is guided
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`accordingly. Nat’l Council of La Raza v. Dep’t of Just., No. 03-cv-2559 (LAK), 2004 WL
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`2314455, at *1 (S.D.N.Y. Oct. 14, 2004).
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`Having reviewed the documents, the Court disagrees with the SEC. The SEC’s brief and
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`documents demonstrate that, to the extent agency deliberations concerning the regulation of
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`digital asset offerings were occurring at the time of the Speech’s drafting, they were occurring
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`separately and in parallel to the Speech. The SEC conflates emails about and drafts of the Speech
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`that actually “compris[ed] part of” those parallel deliberations with emails and edits that merely
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`mentioned such deliberations or were otherwise relevant to them but not an “essential link.”
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`Grand Cent. P’ship, Inc. v. Cuomo, 166 F.3d 473, 482 (2d Cir. 1999) (first quoting Hopkins v.
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`U.S. Dep’t of Hous. & Urb. Dev., 929 F.2d 81, 84-85 (2d Cir. 1991)); see Mapother v. Dep’t of
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`Just., 3 F.3d 1533, 1537 (D.C. Cir. 1993) (“[T]he privilege serves to protect the deliberative
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`process itself, not merely documents containing deliberative material.”).
`
`8
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`

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`Case 1:20-cv-10832-AT-SN Document 465 Filed 04/11/22 Page 9 of 11
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`Emails related to and drafts of the Speech are not, as the SEC suggests, analogous to the
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`messaging records in Nat. Res. Def. Council v. U.S. Env’t Prot. Agency (“NRDC”). 19 F.4th
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`177, 189 (2d Cir. 2021). Unlike the records in NRDC, “draft talking points prepared for senior
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`agency staff about agency policies and internal discussions and draft responses relating to
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`inquiries from the press and from members of Congress,” id. at 185, the emails and drafts here
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`were in service of remarks that were explicitly not agency policy. “[R]ecords that are not related
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`to the form and content of” an agency’s communication about its policy “will generally lie
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`outside the scope of the privilege, even if those records were created while the agency was
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`making its communications decision. In other words, only those agency documents that ‘bear on
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`the formulation or exercise’ of the ‘policy-oriented judgment’ embodied in an agency
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`communication qualify as deliberative.” Id. at 189-90 (quoting Grand Cent. P’ship, 166 F.3d at
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`482) (emphasis added). The SEC seeks to have it both ways, but the Speech was either intended
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`to reflect agency policy or it was not. Having insisted that it reflected Hinman’s personal views,
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`the SEC cannot now reject its own position. The Speech was not an agency communication, and
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`the deliberations as to its content are not protected by the privilege.
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`
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`The SEC has failed to demonstrate that the Court overlooked any factual matters that
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`were put before it in deciding the privilege’s applicability to Entry 9 of Appendix A. Its motion
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`for reconsideration is denied. However, mindful of the “important public interests” served by the
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`privilege, the Court agrees that clarification will aid the parties.
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`II.
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`Clarification
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`A decision to clarify an order previously issued falls “within the sound discretion of the
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`district court.” A.V. by Versace, Inc. v. Gianni Versace, S.p.A., 126 F. Supp. 2d 328, 334
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`(S.D.N.Y. 2001). “Clarifications of orders previously issued . . . add certainty to an implicated
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`9
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`

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`Case 1:20-cv-10832-AT-SN Document 465 Filed 04/11/22 Page 10 of 11
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`party’s efforts to comply with the order.” N.A. Sales Co. v. Chapman Indus., 736 F.2d 854, 858
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`(2d Cir. 1984). The Court considers the SEC’s request for clarification bearing in mind the “the
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`need to ensure that [government] officials [are] able to engage in robust deliberation” as they
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`make agency decisions which affect millions of market participants. Citizens Union of City of
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`New York v. Att’y Gen. of N.Y., 269 F. Supp. 3d 124, 169 (S.D.N.Y. 2017).
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`As discussed above, the question is whether any of the communications about, edits to, or
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`comments on drafts of the Speech were not just related to specific deliberations facing the
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`agency but comprised an “essential link” in those deliberations. Having reviewed the documents,
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`I find that, in general, agency staff communications about edits to the Speech—and the edits
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`themselves—were not part of deliberations about how to communicate agency policy. However,
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`to the extent that there exist communications between staff discussing the Speech in the context
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`of how it implicates other, separate agency deliberations—not deliberations about the content of
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`the speech—the SEC may seek leave to redact those communications from its production. To
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`give the SEC some guidance, comment 12 on page 6 of the Speech draft in Document J, which
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`was submitted for in camera review, is the type of communication contemplated. (The SEC may
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`redact that comment without further leave of the Court.) Other than any such communications,
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`the Court’s January 13, 2022 Order compels production of all emails related to and drafts of the
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`Speech on the SEC’s privilege log.4
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`4 As noted in the January 13, 2022 Order, the SEC may renew a privilege assertion, where appropriate, for
`any document where the deliberative process privilege is found not to apply.
`10
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`

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`Case 1:20-cv-10832-AT-SN Document 465 Filed 04/11/22 Page 11 of 11
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`CONCLUSION
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`The SEC’s motion for reconsideration is DENIED and its motion for clarification is
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`GRANTED. The Clerk of Court is respectfully directed to terminate the motion at ECF No. 429.
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`SO ORDERED.
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`
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`Dated: April 11, 2022
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`New York, New York
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`
`11
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`

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