|From: StockDung||7/8/2015 4:32:43 PM|
|SEC target Pierce challenges Lexington findings again |
2015-07-08 12:16 ET - Street Wire
Also Street Wire (U-*SEC) U S Securities and Exchange Commission
Also Street Wire (U-LXRS) Lexington Resources Inc
by Mike Caswell
Vancouver's Brent Pierce has filed yet another legal challenge to the substantial penalty he received from the U.S. Securities and Exchange Commission for the Lexington Resources Inc. scheme. He has requested the U.S. Court of Appeals conduct an en banc review of a ruling that upheld $11.45-million in sanctions on him. (All figures are in U.S. dollars.) He complains that the SEC unfairly penalized him twice for the same promotion.
The review request is part of a lengthy legal action stemming from the 2004 promotion of Lexington Resources, a purported Oklahoma oil and gas company. The SEC claimed that Mr. Pierce personally sold $2.04-million worth of stock while paying for a spam campaign that boosted the company. The regulator also said that he sold $7.24-million worth of stock through two private entities using offshore accounts in Liechtenstein.
Mr. Pierce's appeal, filed on Monday, July 6, centres around the fact that the SEC obtained the fines through two separate proceedings. The regulator first pursued him solely for the amounts he sold personally. The SEC then filed a new case in which it fined him for the selling through the corporate entities. As Mr. Pierce sees it, the fact that the SEC pursued him a second time violates a legal principal called res judicata (which means that a matter may only be litigated once).
His argument is not a new one. He previously made the same complaint in an internal appeals process at the SEC. That process culminated in a hearing presided over by a panel of five SEC officials, including chairman Mary Jo White. On March 8, 2014, the panel ruled against Mr. Pierce, finding that the second case was only necessary because he had provided information that turned out to be untrue. He had fraudulently concealed his role with the two entities that sold $7.24-million worth of shares, the panel ruled. The SEC also recalculated the amount he owed, pegging it at $11.45-million with interest.
Mr. Pierce then went to the courts, asking the U.S. Court of Appeals to hear the matter. In a ruling handed down on May 22, 2015, a three-judge panel found against him as well, agreeing that he had fraudulently concealed his holdings. In sworn testimony he had denied having control over an account, but that turned out to be untrue, the three judges found.
The difference between Mr. Pierce's prior appeal and his present one is that he is seeking a review en banc, or before a larger panel of judges than the three that previously heard his case. His appeal request does not automatically result in such a hearing. The court ordinarily only considers such hearings when the matter is of exceptional importance.
Although much of what Mr. Pierce is arguing in Monday's review request looks to repeat his prior appeals, he has added a complaint about the administrative law judge who initially imposed the fine. He contends that the judge was not properly appointed. As with most cases at the appeal court, the argument hinges on points of law and is nearly incomprehensible to an ordinary reader. Essentially, Mr. Pierce says that the judge's appointment did not follow the requirement of being done by the president, a court of law or a department head.
Pierce's Lexington fines
Whatever the outcome of Mr. Pierce's review request, it comes nearly seven years after the SEC initially cited him for the Lexington promotion. In an administrative order dated July 31, 2008, the regulator claimed that he pumped the stock to $7.50 from $3 with spam, tout sheets and advertising on investing websites. The regulator held a three-day hearing for Mr. Pierce in February, 2009, in Seattle. Mr. Pierce did not attend, citing concerns he could be arrested in the United States for his role with another company, CellCyte Genetics Corp. The judge found his failure to appear was unexpected and she drew an "adverse inference" from it. She eventually imposed the $2.04-million fine.
The SEC's second case, which it filed on June 8, 2010, cited Mr. Pierce for selling Lexington shares through accounts in the names of two private entities, Newport Capital Corp. and Jenirob Ltd. The SEC said that the two companies held 1.6 million shares of Lexington at Hypo Bank in Liechtenstein. The regulator had previously been unable to determine beneficial ownership of those shares because of privacy laws in Liechtenstein, but eventually discovered that Mr. Pierce owned them. Mr. Pierce lost the second case as well, with a judge finding against him on July 27, 2011. The judge assessed his proceeds from the sales as $7.24-million and ordered him to pay that amount, plus interest.
For Mr. Pierce, the SEC is not the only regulator looking at his Lexington actions. On May 19, 2015, the B.C. Securities Commission applied to permanently ban him from the markets, citing his contempt for the securities and regulatory system. Among other things, the BCSC cited the Lexington case, noting in particular that Mr. Pierce lied to SEC staff and had not shown any recognition that his conduct was wrong. The BCSC has not yet scheduled a hearing for Mr. Pierce.
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|From: StockDung||1/25/2022 2:26:35 PM|
|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.
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