SEC Charges Unregistered Penny Stock Dealer
Litigation Release No. 24779 / March 24, 2020
Securities and Exchange Commission v. Justin W. Keener d/b/a JMJ Financial, No. 20-cv-21254 (S.D. Fla. March 24, 2020)
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, Florida, 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. 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 SEC's complaint charges Keener with violating the registration provision of Section 15(a)(1) 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.