The Securities and Exchange Commission today announced charges against Justin W. Keener d/b/a JMJ Financial for failing to register as a securities dealer with the SEC. Keener allegedly bought and sold billions of newly issued shares of penny stock, generating millions of dollars in profits.
The SEC's complaint, filed in federal court in Miami, alleges that between January 2015 and January 2018, Keener engaged in the business of purchasing convertible notes from penny stock issuers, converting the notes into shares of stock at a large discount from the market price, and selling those newly issued shares into the market at a significant profit. Keener allegedly purchased convertible notes from more than 100 separate issuers and sold more than 17.5 billion shares of newly issued penny stock into the market, generating over $21.5 million in profits. As alleged, Keener was not registered as a dealer with the SEC, in violation of the mandatory registration provisions of the federal securities laws.
"The privilege of being a dealer in our securities market comes with important responsibilities and regulatory obligations, including submitting to regulatory inspections and oversight of operations," said Carolyn Welshhans, Associate Director in the Division of Enforcement. "By failing to register with the Commission, Mr. Keener evaded important safeguards that help protect the integrity of our markets."
The SEC's complaint charges Keener with violating the registration provision of the Securities Exchange Act of 1934. The SEC seeks a permanent injunction, disgorgement of ill-gotten gains plus prejudgment interest, a civil penalty, and a penny stock bar.
The SEC's investigation was conducted by Antony Richard Petrilla, Hope Hall Augustini, and Joshua Braunstein and supervised by Brian O. Quinn and Carolyn M. Welshhans. The litigation will be led by Messrs. Braunstein and Petrilla and supervised by Jan Folena.
For information on other recent SEC actions against unregistered dealers, see SEC v. John D. Fierro, et al., No. 20-cv-2104 (D.N.J. Feb. 26, 2020)/Lit. Rel. No. 24748; SEC v. River North Equity LLC, et al., No. 19-cv-01711 (N.D. Il. March 11, 2019)/Lit. Rel. No. 24419; SEC v. Ibrahim Almagarby, et al., No. 17-cv-62255 (S.D. Fla. Nov. 17, 2017)/Lit. Rel. No. 23992; In the Matter of Ironridge Global Partners, LLC and Ironridge Global IV, Ltd., Exchange Act Rel. No. 81443 (Aug. 21, 2017); In the Matter of IBC Funds, LLC, Securities Act Rel. No. 10042, Exchange Act Rel. No. 77195 (Feb. 19, 2016).
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