|SEC Wins Summary Judgment Against Unregistered Penny Stock DealerLitigation Release No. 25314 / January 21, 2022Securities and Exchange Commission v. Justin W. Keener d/b/a JMJ Financial, No. 20-cv-21254 (S.D. Fla. January 21, 2022)|
On January 21, 2022, Judge Beth Bloom of the United States District Court for the Southern District of Florida granted the SEC's motion for summary judgment against Justin W. Keener d/b/a JMJ Financial. The SEC's complaint alleged that Keener failed to register as a securities dealer with the SEC, or to associate with a registered dealer, when he bought and sold billions of newly issued shares of penny stock from at least January 2015 through January 2018. Keener obtained the shares directly from issuers after converting debt securities known as convertible notes. By failing to register, Keener avoided certain regulatory obligations for dealers that govern their conduct in the marketplace, including regulatory inspections and oversight, financial responsibility requirements, and maintaining books and records.
The court ruled that Keener met the statutory definition of dealer because he operated a regular business of buying and selling securities for his own account. The court found that his failure to register as a dealer, or associate with a registered dealer, violated the dealer registration provisions of Section 15(a) of the Securities Exchange Act of 1934. The court also denied Keener's cross motion for summary judgment. The court ordered the parties to propose a briefing schedule for remedies.
The SEC is represented by Joshua E. Braunstein and Antony Richard Petrilla.