When the U.S. Securities and Exchange Commission (SEC) brought an enforcement action against Ripple Labs, Inc. for violating Section 5 of the Securities Act of 1933, as amended (1933 Act), many hoped for or feared a large shift in U.S. federal securities regulation. Section 5 of the 1933 Act requires that offers and sales of a security be registered with the SEC unless an exemption from registration is available. The SEC’s claims were built on the categorization of XRP — a digital token generated and transferable on a blockchain — as a security under Section 2(a)(1) of the 1933 Act.

Section 2(a)(1) classifies a financial instrument as a security if it is one of a number of listed instruments, unless the context otherwise requires. The list includes stock, bonds, debentures and other evidence of indebtedness, as well as more general terms describing financial interests — including investment contracts. In a 1946 opinion, SEC v. W.J. Howey Co., 328 U.S. 293 (1946), the Supreme Court defined an investment contract as “a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.” Although the word “solely” has been softened over the years to something more like “primarily,” that 1946 definition — known as the Howey test — has withstood the test of time, providing what the Howey Court described as “a flexible, rather than a static, principle, one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits.”

Classifying digital assets on the spectrum of financial instruments has been a challenging proposition. Each asset is unique, created by blockchain source code to have its own distinctive features. The SEC has indicated its view that digital assets may be investment contracts — and therefore securities — under the Howey test and provided related guidance. See, e.g., here. The application of the Howey test to digital assets has been debated by practitioners and academics and offers thought-provoking questions that, in the absence of further congressional or SEC action, courts will ultimately determine. That is why the SEC’s legal action against Ripple has engendered so much attention.

Yet, as things turned out, the trial court’s summary judgment order filed in United States District Court Southern District of New York on July 13 is somewhat unremarkable, even if illuminating. Using the Howey test, the Ripple court finds that Ripple’s initial, targeted sales of XRP to institutions were, indeed, sales of securities. This part of the Ripple court’s order is relatively straightforward. However, Ripple also made more generalized, programmatic sales of XRP into the market, which the court determined did not involve the offer or sale of a security. The court’s reasoning revolved principally around its conclusion that these market sales did not evidence a financial instrument that necessarily represents an investment of money in which there is an expectation of profits generated from the efforts of the promoter or a third party.

I have a lot of questions about this part of the Ripple court’s order. The court’s order offers a somewhat shallow analysis of what it means for a programmatic purchaser of XRP to expect profits (and the extent to which purchasers of XRP in fact expect profits) and fails to consider certain undeniable impacts that Ripple’s initial and ongoing activities have on the profit potential of XRP. I have written about this in a blog post on the Business Law Prof Blog. My co-blogger Ann Lipton also has offered some of her wisdom on the court’s order in a separate blog post. Overall, many unresolved issues remain. As a result, the Ripple opinion may turn out to be more significant for what it does not say than for what it does say. In sum, the opinion does not tell us as much as many had hoped or feared, creating a mere ripple in this area of law rather than a tidal wave.

This article was contributed by Joan Heminway. She is the Rick Rose Distinguished Professor of Law and Interim Director of the Institute for Professional Leadership at The University of Tennessee College of Law, a corporate finance lawyer and a past chair of the TBA Business Law Section.

Hope you had a wonderful summer!

Federal prosecutors on Thursday accused former Tennessee state senator Brian Kelsey of intentionally delaying his sentencing after he unsuccessfully attempted to withdraw his guilty plea in his federal campaign finance laws case. Kelsey, a Republican from Germantown, has engaged his third set of attorneys in the matter, prompting Assistant U.S. Attorney Amanda Klopf to compare switching up attorneys to “throwing a wrench in the gears again.” The Associated Press reports that Judge Waverly Crenshaw has set Kelsey's new sentencing date for Aug. 11.

Petitioner, James William Mabe, appeals the denial of his post-conviction petition, arguing that the post-conviction court erred in denying his petition alleging ineffective assistance of counsel at trial. Following our review of the entire record and the briefs of the parties, we affirm the judgment of the post-conviction court.

The Defendant-Appellant, Cededrick Ivory, was indicted by a Shelby County Grand Jury for first-degree premeditated murder in the shooting death of Anthony Travis (count one), the attempted first-degree murder of Malik Muhammad (count two), and unlawful employment of a firearm during the commission of first-degree murder (count three). Prior to trial, the State dismissed counts two and three. The Appellant was convicted as charged by a Shelby County jury of first-degree premediated murder (count one) and sentenced to life in prison. In this appeal as of right, he raises the following issues for our review: (1) whether the evidence is sufficient to support his conviction of first-degree premeditated murder; (2) whether the trial court erred in refusing to instruct the prosecutor to correct the testimony of a state witness; and (3) whether the trial court erred in excluding the dates of prior charged offenses during the cross-examination of two state witnesses.1 Upon our review, we must remand this case for entry of separate judgment forms reflecting a dismissal of counts two and three. In all other respects, we affirm the judgment of the trial court.

In this premises liability case concerning a customer’s fall inside of a restaurant, video surveillance footage from a security camera in the restaurant was not preserved, precipitating the filing of a sanctions motion by the Plaintiffs for spoliation. Although several sources of evidence existed pertaining to the condition of the restaurant flooring where the customer fell, and although the trial court concluded that the Plaintiffs were not prevented from proving fault in this case in the absence of the video evidence, the trial court ultimately entered significant sanctions against the Defendants, including holding that it was conclusively established for purposes of trial that the Defendants had actual or constructive notice that the floor where the fall occurred was “slick” because of a substance or because of a general and continuing condition, as well as striking the Defendants’ affirmative defenses of comparative fault. Upon the filing of an application by the Defendants, we granted an extraordinary appeal under Rule 10 of the Tennessee Rules of Appellate Procedure. For the reasons stated herein, we vacate the trial court’s sanctions order and remand for further proceedings consistent with this Opinion.

MATHIS, Circuit Judge. In the middle of the day, Donald Wilson fired nine shots at an occupied, moving vehicle, striking the driver multiple times. He claims he did so in self-defense. But Wilson was a felon at the time; therefore, it was unlawful for him to possess a firearm or ammunition. Wilson pleaded guilty to being a felon in possession of ammunition and received an above-Guidelines sentence of 46 months’ imprisonment. Wilson appeals, arguing that his sentence is procedurally and substantively unreasonable. Pertinent here, he asserts that his self-defense claim should have precluded the district court from relying on U.S.S.G. § 2K2.1(b)(6)(B) to enhance his sentence. Because the district court failed to make factual findings regarding Wilson’s self-defense claim, we vacate Wilson’s sentence and remand to the district court for resentencing.

JANE B. STRANCH, Circuit Judge. In September 2018, Michigan State Police officers arrested Janice Brown without a warrant for alleged witness intimidation. She was jailed for approximately 96 hours and was not brought before a judge for a probable cause hearing during that time. None of the officers involved in her arrest requested a warrant or took any other action relating to her detention. Brown sued the officers for unreasonably seizing her without probable cause and detaining her without due process of law, in violation of the Fourth Amendment. The officers moved for summary judgment based on qualified immunity. The district court denied their motion, and they appealed. We AFFIRM in part and REVERSE in part.

In a private petition for termination of parental rights, the petitioner alleged multiple grounds for termination: (1) abandonment for failure to visit; (2) abandonment for failure to support; and (3) failure to manifest an ability and willingness to assume custody. The trial court found the Father’s parental rights should be terminated based upon these three grounds and that termination was in the child’s best interest. We affirm the trial court’s ruling as to the termination grounds of abandonment by failure to visit and failure to support. Because the trial court did not make findings of fact concluding that placing legal and physical custody with Father would pose a risk of substantial harm to the physical or psychological welfare of the child, we must vacate the trial court’s ruling as to the failure to manifest an ability and willingness to assume custody ground. We affirm the trial court’s conclusion that termination of Father’s parental rights is in the best interest of the child.

In this real property dispute, the petitioner brought an action to quiet title to and remove the respondent from a parcel of improved real property located in Cumberland County. Following a bench trial, the trial court ordered that the title of the property be fully vested in the petitioner. The trial court also ordered the respondent to vacate the premises within ten days. Following a damages hearing, the trial court entered an order awarding to the petitioner $8,000 in compensatory damages and $1,000 in attorney’s fees. The respondent has appealed, and the petitioner has raised an issue alleging that this is a frivolous appeal. Because we are unable to discern from the trial court’s judgment any consideration of the Tennessee Supreme Court Rule 8, Rule of Professional Conduct 1.5 factors (“RPC 1.5 factors”), we vacate the award of attorney’s fees and remand for the trial court to make a new determination of a reasonable attorney’s fee award to the petitioner based on the RPC 1.5 factors. We deny the petitioner’s request for damages on appeal. We affirm the trial court’s judgment in all other respects.