The Securities and Exchange Commission (SEC), under Chair Gary Gensler, has faced a string of legal defeats recently, with the latest setback coming this week in a case regarding proxy advisory firms.
Proxy advisory firms play a crucial role in the capital market by analyzing board proposals and guiding shareholders on how to vote. In 2020, the SEC, then led by Jay Clayton, expanded its oversight to these influential entities to prevent potential manipulation.
However, upon taking office, Gensler directed his staff to re-examine the 2020 rule and sought to rescind it. This move sparked a legal battle, culminating in a recent ruling by the US Court of Appeals for the Fifth Circuit against the SEC.
“This decision confirms that federal agencies are bound by the rule of law,” stated Linda Kelly, Chief Legal Officer of the National Association of Manufacturers (NAM), which spearheaded the fight against the SEC’s rollback.
This isn’t the first time Gensler has lost on the proxy advisor front. In February, a D.C. District Court deemed his attempt to rescind the rule “contrary to law.”
Crypto Cases Crumble Too
Gensler’s legal woes extend beyond proxy advisors. He has also faced setbacks in the cryptocurrency space. His aggressive stance has resulted in losses on high-profile cases and forced him to scale back tactics in others.
A recent example is the dropped lawsuit against ConsenSys, the Ethereum incubator, which could have impacted the classification of Ethereum (ETH) as a security.
The Ripple case, however, remains Gensler’s biggest crypto battleground. Here too, the SEC has lost key pre-trial rulings, forcing adjustments. Initially seeking $2 billion from Ripple, the SEC’s demands have dwindled to a fraction of that, with Ripple suggesting a mere $10 million as a potential settlement.
A Ripple victory could be a defining moment for Gensler’s legacy. Facing growing criticism from lawmakers and whispers of being a liability within the Biden administration, a loss could significantly impact his standing.
Meanwhile, the XRP community, despite not reaching the bull market’s peak, remains a major player in the cryptocurrency landscape.
Also Read: SEC Shakes Crypto Market: Lido, Rocket Pool, and MetaMask in Crosshairs
Gensler’s recent string of losses raises questions about the direction of the SEC and its approach to regulating both traditional finance and the burgeoning world of cryptocurrency.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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