Penny stock dealer faces SEC charges for violating federal securities laws

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Image source; FBI.gov

The Securities and Exchange Commission (SEC) filed a lawsuit against a penny stock dealer for violating the mandatory registration provisions of the federal securities law.

In the complaint, the Commission identified the defendant as Justin W. Keener who is also doing business as JMJ Financial. The defendant allegedly generated millions of dollars of profits by buying and selling billions of newly issued shares of penny stock.

The SEC alleged that Keener acted as an unregistered penny stock dealer between January 2015 and January 2018, a violation of the Securities Exchange Act of 1934.

The law requires any person engaged buying and selling securities as part of his or her regular business, to register with the SEC as a dealer or associated with a dealer registered with the Commission.

According to the Commission, Keener purchased convertible notes from more than 100 penny stock issuers. He converted them to newly issued shares of stocks at a large discount from the market price.

The SEC alleged that the defendant sold more than 17.5 billion shares of newly issued penny stock into the market and generated over $21.5 million in profits.

The Commission’s Enforcement Division Associate Director Carolyn Welshhans said, “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. By failing to register with the Commission, Mr. Keener evaded important safeguards that help protect the integrity of our markets.”

The SEC is seeking a court order permanently restraining and enjoining Keener from acting as an unregistered securities dealer and from participating in the offering of any penny stock.

The Commission is also seeking a court order requiring the defendant to pay an appropriate civil penalty and to disgorge with prejudgment interest all ill-gotten gains obtained from buying and selling penny stocks.