IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF FLORIDA

SECURITIES AND EXCHANGE COMMISSION

Plaintiff,

v.

JUSTIN W. KEENER D/B/A JMJ FINANCIAL, 

Defendant.

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No. 20-cv-21254 

Hon. Beth Bloom 

PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S MEMORANDUM OF 

LAW IN OPPOSITION TO DEFENDANT’S MOTION IN LIMINE TO EXCLUDE ANY 

EVIDENCE REGARDING ALLEGED VICTIMS, COUNTERPARTIES, OR HARM

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TABLE OF CONTENTS

BACKGROUND ...........................................................................................................................1

ARGUMENT.................................................................................................................................2

I. The Question of Liability is for the Jury; The Question of

Remedies is for the Court ............................................................................................2

II. The Appropriate Time for Presentation of Evidence Concerning

Remedies, Including Disgorgement, is After a Finding of Liability ...........................4

III. Liu Does Not Change the SEC’s Required Disclosures

or Burden of Proof ......................................................................................................6

A. Overview of the Supreme Court’s Holding in Liu.................................................6

B. Liu Does Not Create New Disclosure Obligations................................................7

IV. The SEC has Complied with Its Discovery Obligations............................................10

CONCLUSION............................................................................................................................17

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TABLE OF AUTHORITIES

CASES

Brice v. Haynes Invest., LLC,

2021 WL 2936733 (N.D. Cal. July 13, 2021)....................................................................4

CFPB v. Global Fin. Support, Inc.,

2021 WL 1165078 (S.D. Cal. Mar. 26, 2021) ...................................................................9

CFTC v. Tayeh,

2021 WL 794542 (11th Cir. Mar. 2, 2021)........................................................................4

Estakhrian v. Obenstine, 

2021 WL 2418972 (9th Cir. June 14, 2021)......................................................................9

James v. CSX Transp. Inc., 

2017 WL 2535726 (M.D. Ga. 2017)..................................................................................3

Liu v. SEC,

140 S.Ct. 1936 (2020)...........................................................................................ibid.

SEC v. Almagarby,

Case No. 17-62255-CIV-COOKE/HUNT, slip op. (S.D. Fla. Aug. 16, 2021)...............9

SEC v. AR Capital, LLC,

2021 WL 1988084 (S.D.N.Y. May 18, 2021) ...................................................................7

SEC v. Blackburn,

2020 WL 10787527 (E.D. La. Nov. 3, 2020). ...................................................................9

SEC v. Capital Solutions Monthly Income Fund, LP, 

818 F.3d 346 (8th Cir. 2016) .............................................................................................3

SEC v. Commonwealth Chem. Sec., Inc.,

574 F.2d 90 (2d Cir. 1978).................................................................................................3

SEC v. Cope,

2021 WL 653088 (S.D.N.Y. Feb. 19, 2021)......................................................................7

SEC v. Curative Biosciences, Inc.,

2020 WL 7345681 (C.D. Cal. Oct. 25, 2020)....................................................................7

SEC v. Dang,

2021 WL 1550593 (D. Conn. Apr. 19, 2021).....................................................7

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SEC v. Dropil, Inc.,

2020 WL 7348021 (C.D. Cal. Oct. 23, 2020)....................................................................8

SEC v. Erwin,

2020 WL 7310584 (D. Col. Dec. 11, 2020).......................................................................7

SEC v. First City Fin. Corp.,

890 F.2d 1215, 1231-32 (D.C. Cir. 1989).........................................................................4

SEC v. First Jersey Sec., Inc.,

101 F.3d 1450 (2d Cir. 1996).....................................................................................3-4, 10

SEC v. Fowler, 

2021 WL 3083655 (2d Cir. 2021)......................................................................................4

SEC v. Ginsburg, 

2002 WL 1835810 (S.D. Fla. July 8, 2002)..................................................................3, 4

SEC v. Huff, 

2010 WL 148232 (S.D. Fla. Jan. 10, 2010)......................................................................8

SEC v. Janus Spectrum, LLC,

15-cv-609, slip. op. (D. Ariz. Apr. 26, 2021) ....................................................................7

SEC v. Johnson,

595 F. Supp. 2d 40 (D.D.C. 2009).....................................................................................4

SEC v. Laura, 

2020 WL 8772252 (E.D.N.Y. Dec. 30, 2020)...................................................................8

SEC v. Levin,

849 F.3d 995 (11th Cir. 2017) ...........................................................................................8

SEC v. Levine,

279 F. App’x 6 (D.C. Cir. 2008)........................................................................................5

SEC v. Mizrahi,

2020 WL 6114913 (C.D. Cal. Oct. 5, 2020)......................................................................7

SEC v. Montano,

2019 WL 2254946 (M.D. Fla. Mar. 5, 2019) .................................................... .......11-12

SEC v. Montgomery, 

2021 WL 210749 (W.D. Tex. Jan. 20, 2021) ....................................................................7

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SEC v. Razmilovic,

2010 WL 2540762 (E.D.N.Y. June 14, 2010) ..................................................................11

SEC v. Rind,

991 F.2d 1486 (9th Cir. 1993) ..........................................................................................3

SEC v. Rinfret,

2020 WL 6559411 (S.D.N.Y. Nov. 9, 2020).....................................................................7

SEC v. Rosen,

2002 WL 34414715 (S.D. Fla. Apr. 24, 2002) ..............................................................4, 5

SEC v. Smith,

2020 WL 6712257 (C.D. Cal. Oct. 19, 2020)....................................................................7

SEC v. U.S. Pension Trust Corp.,

2010 WL 3894082 (S.D. Fla. Sept. 10, 2010) ...................................................................8

SEC v. Westport Capital Mkts., LLC,

2021 WL 2801626 (D. Conn. July 6, 2021) ......................................................................9

SEC v. Yang

824 Fed. Appx. 445 (9th Cir. Aug. 6, 2020)......................................................................4

Shannon v. United States,

512 U.S. 573 (1994)...........................................................................................................5

Steadman v. SEC,

450 U.S. 91 (1981).............................................................................................................5

Tull v. United States,

481 U.S. 412 (1987)...........................................................................................................3

STATUTES & RULES

15 U.S.C. § 78o(a)(1)...................................................................................................................2

15 U.S.C. § 78u........................................................................................................................3, 6, 7

Fed. R. Civ. P. 26(a) ...........................................................................................................11, 17

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Plaintiff Securities and Exchange Commission (“SEC”) respectfully submits this 

memorandum of law in opposition to Defendant’s Motion in Limine to Exclude Any Evidence 

Regarding Alleged Victims, Counterparties, or Harm [ECF No. 69] (“Def. MIL”). Defendant 

argues that this Court should bar the SEC from adducing any evidence of alleged victims, 

counterparties, or harm “at or after trial,” Def. MIL at 12, because—according to Defendant—to 

permit such evidence would be to permit “trial by ambush,” id. at 3. Defendant’s argument 

misapprehends: (i) the bifurcated nature of SEC proceedings; (ii) the appropriate time for 

presentation of evidence concerning Defendant’s ill-gotten gains; (iii) the Supreme Court’s 

decision in Liu v. SEC, 140 S.Ct. 1936 (2020); and (iv) the SEC’s full compliance with its 

discovery obligations. This Court should deny Defendant’s motion.

BACKGROUND

Defendant Justin W. Keener, d/b/a JMJ Financial (“Defendant” or “Keener”) engaged in 

the business of repeatedly purchasing convertible notes from small “microcap” issuers, 

converting the notes into stock at significant discounts from prevailing market prices, and selling 

the resulting newly issued shares into the public market for a significant profit. Complaint ¶¶ 1-4 

[ECF No. 1]. Defendant sold more than 38 billion shares of stock purchased from more than 

200 different issuers into the public market. See Plaintiff’s Statement of Material Facts ¶¶ 27, 

29 [ECF No. 67] (“SEC SMF”). Defendant’s net proceeds from sales between March 24, 2014 

and January 31, 2018 totaled approximately $34 million. Id. ¶ 31. The SEC alleges that, by 

engaging in this business, Defendant acted as an unregistered dealer in violation of Section 

15(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78o(a)(1)]. 

There is one issue in the SEC’s case in chief, and that is whether Defendant acted as an 

unregistered dealer. To prevail on this claim, the SEC must prove by a preponderance of the 

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evidence that: Defendant (i) made use of the mails or other means or instrumentalities of 

interstate commerce; (ii) to effect transactions in, or to induce or to attempt to induce the 

purchase or sale of, securities; (iii) as part of a regular business; (iv) while not registered with the 

SEC as a dealer; and (v) when Defendant was not associated with an entity registered with the 

SEC as a dealer. Complaint ¶ 24; 15 U.S.C. § 78o(a)(1). This issue can, and should, be resolved 

in the SEC’s favor on summary judgment. See Plaintiff Securities and Exchange Commission’s 

Motion for Summary Judgment and Incorporated Memorandum of Law (“SEC SJ Mtn.”) [ECF 

No. 68] (seeking judgment in favor of the SEC and against Defendant on Count I of the 

Complaint, and on the Defendant’s Third, Fourth, Fifth, and Sixth Affirmative Defenses). 

ARGUMENT

Defendant’s motion hinges on Defendant’s misplaced argument that the SEC has 

somehow failed in its discovery obligations concerning the calculation and proposed distribution 

of an as-yet-to-be-awarded disgorgement amount, and that this Court therefore should sanction 

the SEC by precluding the SEC from admitting “at or after trial” evidence of victims, 

counterparties, or harm. Def. MIL at 12. There is no basis for the extraordinary sanction 

Defendant seeks, and this Court should deny Defendant’s motion.

I. The Question of Liability is for the Jury; The Question of Remedies is for the 

Court

It is well established that in actions under the Exchange Act, the jury determines liability 

(based on evidence relevant to that question), and the Court determines relief (based on evidence 

relevant to that question). The bifurcated nature of SEC proceedings stems from the nature of 

the relief sought (injunction, disgorgement, prejudgment interest, and/or penalties)—all of which 

are properly determined by the Court. See, e.g., Tull v. United States, 481 U.S. 412, 425-27

(1987) (holding that Constitutional right to a jury applies to determination of liability, but “trial 

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court and not the jury should determine the amount of penalty”); SEC v. Capital Solutions 

Monthly Income Fund, LP, 818 F.3d 346, 355 (8th Cir. 2016) (“[H]aving been found liable by 

the jury, [defendant] was not entitled to have the jury decide the remedies.”); SEC v. Rind, 991 

F.2d 1486, 1493 (9th Cir. 1993) (stating that there is no right to a jury trial where only injunctive 

relief and disgorgement are sought); SEC v. Commonwealth Chem. Sec., Inc., 574 F.2d 90, 95-96 

(2d Cir. 1978) (holding that SEC’s action for injunction and disgorgement was analogous to 

traditional jurisdiction of equity to award restitution, meaning that defendants were not entitled 

to a jury trial); James v. CSX Transp. Inc., No. 4:15-CV-204(CDL), 2017 WL 2535726, at *2 

(M.D. Ga. 2017) (“Equitable relief . . . is decided by the judge and not the jury.”). 

Accordingly, if Defendant is found liable at summary judgment or trial, then this Court—

not the jury—will determine the relief to be granted. See SEC v. Ginsburg, No. 99-8694-CVRYSKAMP, 2002 WL 1835810, at *2 (S.D. Fla. July 8, 2002) (citing 15 U.S.C. § 78u-1). The

Court may enjoin Defendant from violations of Section 15(a)(1), issue a penny stock bar, 

require disgorgement and payment of prejudgment interest, and require the payment of a civil 

penalty. Id. (citing 15 U.S.C. §§ 78u-1(d)(2) and (3)); see also 15 U.S.C. §§ 78u(d)(5), & (7); 

Complaint at p.12. 

With respect to disgorgement, this Court will have “broad discretion not only in 

determining whether or not to order disgorgement but also in calculating the amount to be 

disgorged.” SEC v. First Jersey Sec., Inc., 101 F.3d 1450, 1474-75 (2d Cir. 1996) (emphasis 

added). Importantly, the SEC will be entitled to disgorgement upon producing a reasonable 

approximation of Defendant’s ill-gotten gains. See CFTC v. Tayeh, --- Fed. Appx. ---, 2021 WL 

794542, at *1-2 (11th Cir. Mar. 2, 2021) (applying reasonable approximation standard after Liu);

SEC v. Fowler, --- F.4th ---, 2021 WL 3083655, at *9 (2d Cir. 2021) (accord); SEC v. Yang, 824 

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Fed. Appx. 445, 447 (9th Cir. Aug. 6, 2020) (accord). “If the disgorgement amount is generally 

reasonable, any risk of uncertainty about the amount falls on the wrongdoer whose illegal 

conduct created that uncertainty.” Fowler, 2021 WL 3083655, at *14 (quotation marks and 

alteration omitted). Thus, once the SEC provides a reasonable estimate of Defendant’s ill-gotten 

gains, Defendant will bear the burden of showing that the SEC’s estimate is inaccurate. See id.; 

see also SEC v. First City Fin. Corp., 890 F.2d 1215, 1231-32 (D.C. Cir. 1989). 

II. The Appropriate Time for Presentation of Evidence Concerning Remedies, 

Including Disgorgement, is After a Finding of Liability

Following a finding of liability at summary judgment or trial, when “[t]he issue of 

remedies is . . . ripe for review,” the SEC will move this Court for the entry of final judgment 

and the imposition of remedies. Ginsburg, 2002 WL 1835810, at *1; see also Brice v. Haynes 

Invest., LLC, --- F. Supp. 3d ---, Case No. 18-cv-01200-WHO, Case No. 19-cv-01481-WHO, 

2021 WL 2936733, at *10 n.18 (N.D. Cal. July 13, 2021) (“The question of what, if any, 

equitable relief should be awarded to plaintiffs will be determined only after considering the jury 

verdict and the evidence at trial.”). In fashioning appropriate relief after a finding of liability, 

this Court may consider trial testimony and exhibits,

1 the parties’ post-trial briefing,2 evidence 

that was not presented to the jury,

3 and—if additional evidence is needed—further discovery and

an evidentiary hearing. See SEC v. Rosen, No. 01-0369-CIV, 2002 WL 34414715, at *1 (S.D. 

Fla. Apr. 24, 2002) (conducting a further evidentiary hearing “with respect to resolving any 

 1

 SEC v. Johnson, 595 F. Supp. 2d 40, 42 (D.D.C. 2009).

2

 SEC v. Rosen, No. 01-0369-CIV, 2002 WL 34414715, at *1 (S.D. Fla. Apr. 24, 2002)

(providing the parties with “an opportunity to address the remaining remedies issues in post-trial 

papers or in an evidentiary hearing, at their option”); Ginsburg, 2002 WL 1835810, at *2 (setting 

briefing schedule for the relief phase of the trial after jury’s verdict).

3

 SEC v. Levine, 279 F. App’x 6, 8 (D.C. Cir. 2008).

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remaining remedies issues raised by the parties for which they believed additional evidence 

might be necessary”).

As with the liability phase, the SEC need only establish its requested relief by a 

preponderance of the evidence, Steadman v. SEC, 450 U.S. 91, 103 (1981), and may rely on 

direct or circumstantial evidence to meet its burden, SEC v. Conaway, 697 F. Supp. 2d 733, 745 

(E.D. Mich. 2010).

As the SEC argues in its motion in limine, because the question of remedies is for this 

Court, not the jury, this Court should preclude Defendant from introducing evidence—including 

expert testimony and evidence concerning purported disgorgement offsets—that is solely 

relevant to the remedies phase. See Plaintiff Securities and Exchange Commission’s Omnibus 

Motion in Limine and Incorporated Memorandum of Law, § III.C [ECF No. 64] (citing cases). 

“The jury’s job is to decide any factual disputes, and then the judge may fashion an equitable 

remedy based on those factual findings.” Shannon v. United States, 512 U.S. 573, 579 (1994) 

(holding, in the criminal context, that where the jury is tasked only with “find[ing] the facts” and 

“decid[ing] whether . . . the defendant is guilty of the crime charged. . . ” “[i]nformation 

regarding the consequences of a verdict is . . . irrelevant to the jury’s task). This Court 

therefore should preclude Defendant—during the jury trial—from introducing fact and expert 

testimony that is solely relevant to the question of disgorgement and the distribution of any tobe-awarded disgorgement amounts during the jury trial. The SEC likewise will not introduce 

(other than if the Court permits Defendant to do so, which it should not) evidence before the jury 

that is solely relevant to disgorgement or distribution of disgorgement. 

III. Liu Does Not Change the SEC’s Required Disclosures or Burden of Proof

Defendant contends that Liu creates a new requirement that the SEC identify individual 

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victims and quantify their losses. Def. MIL at 3. Even more puzzlingly, Defendant contends 

that the SEC must make this showing in its case in chief. Id. Defendant is wrong. 

A. Overview of the Supreme Court’s Holding in Liu

In Liu, the Supreme Court addressed courts’ authority to order disgorgement 

under Exchange Act Section 21(d)(5) [15 U.S.C. 78u(d)(5)], which authorizes the SEC to seek, 

and courts to award, “equitable relief that may be appropriate or necessary for the benefit of 

investors.” Id. The Supreme Court held that Section 21(d)(5) authorizes “a disgorgement award 

that does not exceed a wrongdoer’s net profits,” and that such recovery of unjust enrichment is a 

“mainstay of equity courts.” Liu, 140 S. Ct. at 1942-43 (emphasis added). 

In addition to affirming courts’ authority to order disgorgement, Liu discussed several 

“principles that may guide the lower courts’ assessment” of disgorgement awards. Id. at 1947. 

As relevant here, Liu read the phrase “appropriate or necessary for the benefit of investors” 

in Section 21(d)(5) as a “limitation[ ]” or “restrict[ion]” on a court’s equitable authority to 

disburse collected disgorgement amounts. Id. at 1947-49. The Supreme Court reasoned that the 

“equitable nature of the profits remedy generally requires the SEC to return a defendant’s gains 

to wronged investors for their benefit.” Id. at 1948 (emphasis added). “To hold otherwise,” the

Supreme Court explained, “would render meaningless the latter part of § 78u(d)(5).” Id. But the 

Supreme Court also acknowledged that Congress has established a fund in the U.S. Treasury for 

disgorgement awards that are not deposited in “disgorgement funds” or otherwise “distributed to 

victims.” Id. at 1947 (explaining that, by statute, “these sums may be used to pay whistleblowers 

reporting securities fraud and to fund the activities of the Inspector General”). Because the 

parties had not briefed what “traditional equitable principles govern when, for instance, the 

wrongdoer’s profits cannot practically be disbursed to the victims,” the Supreme Court did “not 

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address [that] issue.” Id. at 1948-49. Rather, the Supreme Court left it for the “lower courts [to] 

evaluate in the first instance” whether an order directing proceeds to the Treasury “would indeed 

be for the benefit of investors as required by § 78u(d)(5) and consistent with equitable 

principles.” Id.

Every court to have considered the question post-Liu has held that distributing disgorged 

funds to victimized investors is “for the benefit of investors” within the meaning of Section 

21(d)(5) and Liu. See, e.g., SEC v. Montgomery, 2021 WL 210749, at *6 (W.D. Tex. Jan. 20, 

2021) (“The Commission’s request for disgorgement would also be for the benefit of investors, 

as it is feasible to distribute those funds to the injured investors.”) (internal citation omitted); see 

also SEC v. AR Capital, LLC, 2021 WL 1988084, at *3 (S.D.N.Y. May 18, 2021); SEC v. Dang, 

2021 WL 1550593, at *7 (D. Conn. Apr. 19, 2021); SEC v. Janus Spectrum, LLC, 15-cv-609, 

slip op. at 3 (D. Ariz. Apr. 26, 2021) [Ex. 5]; SEC v. Cope, 2021 WL 653088, at *3 (S.D.N.Y. 

Feb. 19, 2021); SEC v. Erwin, 2020 WL 7310584, at *5 (D. Col. Dec. 11, 2020); SEC v. Rinfret, 

2020 WL 6559411, at *6 (S.D.N.Y. Nov. 9, 2020); SEC v. Curative Biosciences, Inc., 2020 WL 

7345681, at *9 (C.D. Cal. Oct. 25, 2020); SEC v. Smith, 2020 WL 6712257, at *3 (C.D. Cal. Oct. 

19, 2020); SEC v. Mizrahi, 2020 WL 6114913, at *2 (C.D. Cal. Oct. 5, 2020). 

B. Liu Does Not Create New Disclosure Obligations

Defendant argues that Liu’s exploration of age-old equitable principles somehow requires 

the SEC “to disclose, and to respond to discovery requests about, its theory and evidence as to 

which investors were harmed and in what amounts.” Def. MIL at 2.4

 This is incorrect. See SEC

 4

 Defendant also argues that the SEC must disclose its “calculation of Mr. Keener’s net 

profits.” Def. MIL at 2. The SEC repeatedly has done so, based on the best evidence and 

calculations available during each phase of the case. See Section IV, infra; see also Complaint 

¶¶ 2, 8, 16; Plaintiff’s Initial Disclosures at 2-3 (July 20, 2020) [ECF No. 69-2]; SEC SMF ¶¶ 

27-37 [ECF No. 67]. 

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v. Dropil, Inc., Case No. 8:20-cv-00793-SB (DFMx), 2020 WL 7348021, at *5 (C.D. Cal. Oct. 

23, 2020) (“Liu does not address the essential elements of a claim.”); see also SEC v. Laura, 18-

cv-5075, 2020 WL 8772252, at *4 (E.D.N.Y. Dec. 30, 2020) (an SEC disgorgement action is not 

“coterminous with an individual injured investor’s claim,” therefore, Liu “does not require that a 

disgorgement award reflect every individually wronged investor’s” harm). Liu did not impose 

upon the SEC new obligations to identify investor victims to whom it proposes to distribute any 

disgorgement—much less to do so before any finding of liability or award of disgorgement. Nor 

did Liu create a new requirement to calculate individual investor damages. The Supreme Court 

made no ruling, as Defendant suggests, that the SEC must identify specific victims to whom a 

disgorgement award should be distributed, that all disgorged funds must be returned to investors, 

or that a disgorgement award should be limited to those funds that can be returned to investors. 

Courts in this District routinely have recognized that disgorgement is measured by 

Defendant’s profits, not investor losses. See, e.g., SEC v. Levin, 849 F.3d 995, 1006 (11th Cir. 

2017) (affirming disgorgement award because “the district court properly based the 

disgorgement upon [defendant’s] gains, not investors’ losses.”); SEC v. U.S. Pension Trust 

Corp., No. 07-22570-CIV-Martinez, 2010 WL 3894082, *23 (S.D. Fla. Sept. 10, 2010) (“The 

disgorgement amount should be calculated by measuring illegal profits, not an amount needed to 

reimburse defrauded investors.”); SEC v. Huff, No. 08–60315–CIV, 2010 WL 148232, at *5 

(S.D. Fla. Jan. 10, 2010) (“[T]he [disgorgement] inquiry focuses on a defendant’s gain, not 

investors’ losses.”). This well-established principle has been repeatedly confirmed after Liu. 

See, e.g., SEC v. Westport Capital Mkts., LLC, No. 3:17-cv-02064 (JAM), 2021 WL 2801626, at 

*8 (D. Conn. July 6, 2021) (rejecting the argument that disgorgement would be a “windfall” to 

investors whom defendants claimed were not harmed by a violation, because disgorgement is 

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measured by wrongful gain, not investor harm); CFPB v. Global Fin. Support, Inc., Case No. 15-

cv-2440-GPC-AHG, 2021 WL 1165078, at *4 (S.D. Cal. Mar. 26, 2021) (explaining that “the 

full amount lost by consumers may be an appropriate basis for restitution,” and that Liu “has no 

bearing on whether restitution . . . must exclusively be calculated by measure of net profits”); see 

also Estakhrian v. Obenstine, No. 19-55459, 2021 WL 2418972, at *2 (9th Cir. June 14, 2021) 

(Liu’s net profit limitation inapplicable in claim for restitution where amount was measured 

“simply by what was taken from the plaintiff”).

Nothing in Liu requires the SEC to undertake the significant burden of identifying 

individual harmed investors or quantifying their losses before disgorgement is awarded or 

collected—much less (as Defendant argues) before there is even a finding of liability. “To be 

sure, [Liu] did not create a rule requiring all disgorged funds be returned to investors, or that a 

disgorgement award be limited to those funds that could be returned to investors.” SEC v. 

Blackburn, Case No. 15-2451, 2020 WL 10787527, at *3 (E.D. La. Nov. 3, 2020). Rather, 

identifying the specific individuals and entities who may receive money in any disgorgement 

distribution must await entry of a judgment by this Court specifying the amount of disgorgement, 

as well as a determination of the amount that can be collected. SEC v. Almagarby, Case No. 17-

62255-CIV-COOKE/HUNT, slip op. at 7 (S.D. Fla. Aug. 16, 2021) [Ex. 4] (“[T]he Supreme 

Court made no ruling, as Defendants suggest, that the SEC must identify specific victims to 

whom a disgorgement award should be distributed, or that all disgorged funds must be returned 

to investors, or that a disgorgement award should be limited to those funds that could be returned 

to investors.”) (citing Liu, 140 S.Ct. at 1940).

This Court should not sanction the SEC—before any finding of liability in this matter by 

the fact-finder—for not adducing evidence that goes solely to the question of how any yet-to-beCase 1:20-cv-21254-BB Document 86 Entered on FLSD Docket 08/27/2021 Page 14 of 23
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awarded disgorgement amounts will be distributed to investors. 

IV. The SEC has Complied with Its Discovery Obligations

Because this Court has “broad discretion not only in determining whether or not to 

order disgorgement but also in calculating the amount to be disgorged,” First Jersey, Inc., 101 

F.3d at 1474-75, and is entitled—in connection with its determination of the appropriate 

remedies following a finding of liability—to elicit additional relevant evidence, Defendant’s 

argument that the SEC has somehow failed to support its disgorgement claim is both premature 

and incorrect. The SEC will provide this Court with evidence and argument relevant to the 

Court’s calculation and distribution of disgorgement at the appropriate time. More importantly, 

the SEC has timely made all of the required disclosures concerning its “reasonable 

approximation” of Defendant’s ill-gotten gains and net profits:

First, the SEC’s Complaint—filed a year and a half ago—placed Defendant on notice 

that the SEC intends to seek disgorgement of Defendant’s ill-gotten gains, should the SEC 

prevail on its claim of liability. Complaint ¶ 4 & p.12 (seeking an order that Defendant 

“disgorge, with prejudgment interest, all ill-gotten gains derived from the activities set forth in 

this Complaint”). The Complaint alleges that “[b]y engaging in a regular business of buying 

convertible notes and selling the resulting newly issued shares of microcap stock into the public 

market, Keener operated as an unregistered securities dealer and generated more than $21.5 

million in profits.” Id. ¶ 2 (emphasis added); see also id. ¶ 8 (“Keener’s profits from this 

practice were approximately $21.5 million, the majority of which came from the spread between 

Keener’s discounted acquisition cost for the stock and the prevailing market price.”) (emphasis 

added); id. ¶ 16 (“Keener sold more than 17.5 billion shares of newly issued stock that he 

obtained from convertible notes for approximately $21.5 million in profits.”) (emphasis added). 

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Defendant has been on notice since the inception of this case that the SEC intends to seek 

disgorgement of Defendant’s net profits from the purchase of notes and the sale of shares

relating to the notes. Id. ¶ 8. The information necessary to calculate this amount is publicly 

available or within Defendant’s possession, custody, and control. 

Second—even though Rule 26(a)(1)(A)(iii) only requires disclosure of “damages,” and 

disgorgement is an equitable remedy5—in its Rule 26(a) initial disclosures, the SEC disclosed 

that:

The Commission also seeks monetary relief in the form of 

disgorgement and civil penalties. The disgorgement is based upon 

the amount of net ill-gotten gains Defendant obtained from the 

illegal acts alleged in the Complaint, along with pre-judgment 

interest. The Commission estimates that amount to be $20 

million.

* * * *

At this time, the Commission estimates that Defendant’s 

pecuniary gain from the activity alleged in the Complaint is $20 

million, while acting as an unregistered dealer. The Commission 

reserves its right to amend these calculations and methods based on 

discovery to be conducted in this case. 

Plaintiff’s Initial Disclosures at 2-3 (July 20, 2020) [ECF No. 69-2] (emphasis added). Thus, in 

its Rule 26(a) initial disclosures—served on Defendant on July 20, 2020 (almost exactly one 

month after the Supreme Court’s Liu decision)—the SEC apprised Defendant of its intent to seek 

 5

 Contrary to Defendant’s assertion, by voluntarily making this disclosure, the SEC did 

not “concede[] that it was required to disclose information about its disgorgement demand under 

Rule 26.” Def. MIL at 9. The SEC’s disclosure expressly states that it does not seek “damages.” 

Plaintiff’s Initial Disclosures at 2 (July 20, 2020) [ECF No. 69-2]. “Rule 26(a)(1)(A)(iii) does 

not apply to disgorgement or civil penalties, as neither are a damages remedy.” SEC v. Montano, 

Case No: 6:18-cv-1606-Orl-31GJK, 2019 WL 2254946, *3 (M.D. Fla. Mar. 5, 2019) (declining 

to require the SEC to amend its initial disclosures to provide a computation of damages) 

(citing United States v. Stinson, No. 6:14-CV-1534-ORL-22TBS, 2016 WL 8488241, at *7 

(M.D. Fla. Nov. 22, 2016); SEC v. Razmilovic, No. CV-04-2276, 2010 WL 2540762, at *2 

(E.D.N.Y. June 14, 2010)). 

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“net ill-gotten gains,” from Defendant’s unregistered dealer activity. The SEC’s use of the word 

“net” makes clear that the SEC’s reasonable approximation of the amounts realized by 

Defendant from his unlawful trading activity may be offset by other amounts, the magnitude of 

which is in Defendant’s possession, custody, or control. Liu, 140 S.Ct. at 1949-50 (“Courts may 

not enter disgorgement awards that exceed the gains made upon any business or investment, 

when both the receipts and payments are taken into the account.”) (internal quotation marks and 

citation omitted). 

Third, in its document and interrogatory responses, the SEC responded to Defendant’s 

requests for production concerning both disgorgement and victims. In response to a document 

request asking the SEC to produce “SEC Guidance”6 concerning the calculation of 

disgorgement, the SEC told Defendant that, “[a]ny publicly available SEC and Division guidance 

related to disgorgement calculations would be available on the SEC website and in the form of 

SEC rule releases. The parties have equal access to publicly available materials.” See Ex. 1, 

Plaintiff’s Responses and Objections to Defendant’s First Set of Requests for Production of 

Documents at 7-8 (Oct. 13, 2020). In response to a request concerning the SEC’s calculation of 

Defendant’s profits from unlawful dealer activity, the SEC told Defendant that the SEC’s 

reasonable approximation of Defendant’s net profits was based on Defendant’s own business 

records, to which Defendant has equivalent or better access than the SEC. See SEC’s Responses 

to Defendant’s Fourth Set of Interrogatories at 3 (July 16, 2021) [ECF No. 69-12] (“Mr. 

 6

 Defendant defined “SEC Guidance” as “all current and prior SEC presentations, 

publications, statements, speeches, testimony, releases, no-action letters, letters denying noaction, webpages, Frequently Asked Questions (FAQs), the Guide to Broker-Dealer Registration, 

email or telephone guidance provided by the Division of Trading and Markets or Corporation 

Finance, and any other letters, staff interpretations, or advice.” Defendant’s First Request for 

Production of Documents at 2 (Sept. 11, 2020) [ECF No. 69-5].

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Keener’s own documents, including but not limited to JMJ-LIT-008-000001, identify most, if 

not all, of the transactions in which Mr. Keener sold stock (and the related issuers) at issue in the 

Complaint. The counter-parties to such transactions will be identified using the techniques 

discussed in the deposition of Robert Nesbitt.”). In response to an interrogatory seeking 

disclosure concerning the “victims” of Defendant’s wrongdoing, the SEC stated: 

The interrogatory—seeking the names of each victim and the facts 

supporting their status as victims—is irrelevant to whether JMJ is 

liable for the unregistered dealer charge in this case. The SEC 

need not identify even one victim by name to prove that Defendant 

was in the business of buying and selling securities and, therefore, 

was required to register as a dealer or to secure remedies for such a 

violation. Reliance, victims, and losses are not elements of the 

unregistered dealer charge, hence the information sought in this 

interrogatory is not necessary to any claim or defense and is, 

therefore, not proportional to the needs of this case. At the very 

least, seeking specific victim information is premature. Without 

waiving these objections, and even if such information were 

relevant and proportional, to the extent that victims would need to 

be identified by name, they are the counter-parties to the sales of 

newly-issued stocks that Defendant sold after making 

conversions of convertible notes.

SEC’s Responses to Defendant’s First Set of Interrogatories at 2-3 (Jan. 22, 2021) [ECF No. 69-

11] (emphasis added). The SEC’s responses are not deficient. 

Fourth, the SEC’s Market Surveillance Specialist, Robert Nesbitt, and rebuttal expert, Dr. 

Taveras, fully and truthfully answered all questions posed to them at their depositions concerning 

disgorgement, counterparties, and investor harm. See Ex. 2, Deposition Tr. of Robert Nesbitt 

(June 25, 2021); Ex. 3, Deposition Tr. of Carmen A. Taveras, Ph.D. (July 27, 2021).

While acknowledging that he has not yet conducted the analysis in this specific case

(because the appropriate time to do so is following the Court’s disgorgement determination), Mr. 

Nesbitt detailed for Defendant the manner in which he determines the counterparties in SEC 

enforcement matters, to enable the SEC’s Office of Distributions to return disgorged amounts to 

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injured individuals and entities:

• “So as in any case that I do here, if somebody asks me to look at trading . . . I will 

typically look at bluesheet data, I will look at the internal trading records. I’ll look at 

account statements . . . potentially bank statements. Whatever exists in the case file.” 

Ex. 2 (Nesbitt Tr.) at 51.

• “I would look at every account that [Defendant] had . . . whether it would involve an 

individual or an entity. . . . I would identify each account and I would look at the sales 

that occurred into the market. From there, I would ask . . . the SEC attorneys what 

specific information they were looking for . . . from the buy-side. And I can get as 

granular . . . as necessary.” Id. at 54.

• “Generally what I would do in that area [to identify counterparties] is . . . I would again 

look at the sellers [on] the blue sheets . . . I would look at something like a trade inquiry 

report and I would essentially endeavor to combine the two so that you would identify 

counterparties to the trades. . . . [I]t depends on the level of detail needed. But those are 

the two primary tools that would be needed.” Id. at 74. 

• “Q: So you would match up the trades . . . you would match up Mr. Keener’s sales with a 

buyer on the other side . . . how would you match that up? A: Time stamp, date, 

quantity, price of the trade and the firm involved.” Id. at 77-78.

• “Q: If you have all the buys for a security for, let’s say a three-year time period . . . how 

would you use that data to match it up with . . . Mr. Keener’s sales? A: Again, I can 

answer in general what I have done in the past . . . take someone like Mr. Keener’s sales 

and . . . put them in a chronological . . . order and . . . I would populate that onto the 

chronological list, the trade inquiry report. And then I would populate all the buy-side 

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15

customers as well. And you would be able to match up. If that was necessary where you 

needed to do an exact counterparty like that, that’s how I would do it . . . .” Id. at 81-82. 

• “Counterparty would be the exact . . . person on the other side of a trade. . . . [T]here 

would typically be a market maker and then another retail customer on the other side of 

the trade. Market maker is typically in the middle of the transaction and . . . oftentimes 

between retail customers.” Id. at 82-83.

Dr. Taveras—who is offered in rebuttal to Defendant’s experts—likewise answered all 

questions posed to her concerning disgorgement and investor harm, while acknowledging that 

she has not been asked to conduct an analysis in connection with an as-yet-to-be-awarded 

disgorgement amount. See generally Ex. 3 (Taveras Tr.); id. at 254-55; Plaintiff Securities and 

Exchange Commission’s Memorandum of Law in Opposition to Defendant’s Motion to Exclude 

Rebuttal Expert Report of Dr. Carmen Taveras [filed concurrently herewith]. Because Mr. 

Nesbitt and Dr. Taveras answered Defendant’s questions, Defendant cannot argue that the SEC 

has failed to comply with its discovery obligations merely because Defendant is dissatisfied with 

the answers. 

Finally, in the SEC’s affirmative motion for summary judgment and the accompanying

statement of material facts, the SEC details Defendant’s volume of business and profit from his 

unlawful unregistered dealer activity. See SEC SJ Mtn. at 8-9 [ECF No. 68]; SEC SMF ¶¶ 27-37 

[ECF No. 67]; see also Declaration of Carmen A. Taveras, Ph.D., in Support of Plaintiff’s 

Motion for Summary Judgment [ECF No. 67-11] (“Taveras Decl.”) (summarizing certain 

information produced by Defendant relating to his convertible note transactions). Based on 

information produced by Defendant (Taveras Decl. ¶ 3 [ECF No. 67-11]), and Defendant’s own 

testimony (SEC SMF ¶¶ 34-35 [ECF No. 67]), the SEC establishes that it is undisputed that:

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Between July 2010 and April 2018, Defendant bought more than 

272 convertible notes with 201 different issuers. To purchase the 

notes, and related warrants, Defendant made payments to the 

issuers totaling approximately $52 million. Defendant converted 

these notes on 2,414 occasions and received more than 38 billion 

shares of newly issued stock directly from the issuers. He sold 

those shares into the market through more than 16,000 

transactions for gross proceeds of approximately $93.5 million. 

During the period March 24, 2014 through January 31, 2018, 

Defendant’s net proceeds from selling approximately 33 billion 

shares of stock converted from notes, and warrant agreements 

bundled with the notes, totaled approximately $34 million. Sixtytwo percent (62%) of these net proceeds were from selling stock 

converted from notes; 17% were from selling stock received from 

issuers as payment for outstanding note balances where the parties 

did not employ the conversion mechanism of the notes (also 

known as “settlements”); and 6% were from selling stock from 

“bonuses” associated with notes. Less than one percent of these 

net proceeds derived originally from or were tied to his acquisition 

of convertible notes. 

Defendant had net income of approximately $33 million during 

this period after accounting for proceeds from original issue 

discounts, interest, and penalties as well as write-offs and other 

losses.

Defendant stated that “50 to 100 percent would be a reasonable 

. . . estimate” of Defendant’s profit margin on convertible notes

(i.e., the ratio of Defendant’s profit from a convertible note to his 

acquisition cost.” Despite testifying that Defendant continues to 

engage in the business of buying and selling securities. 

SEC SJ Mtn. at 8-9 (emphasis added). Following a finding of liability, it will be a simple 

arithmetic exercise for the SEC to use these undisputed facts concerning Defendant’s 

unregistered dealer activity—based on Defendant’s own documents and testimony—to calculate 

a reasonable approximation of Defendant’s ill-gotten gains subject to disgorgement.

In sum, at all times, the SEC has complied with its discovery obligations under Rule 

26(a). The SEC has disclosed to Defendant that, following a finding of liability, it intends to 

seek disgorgement based on Defendant’s net profits. The SEC has further disclosed to 

Case 1:20-cv-21254-BB Document 86 Entered on FLSD Docket 08/27/2021 Page 21 of 23
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Defendant that it may reach a reasonable approximation of this amount through reliance on 

Defendant’s own documents and testimony. Moreover, in connection with its determination of 

remedies, this Court may (in its discretion) permit the parties to provide briefs, undertake 

additional discovery, or conduct an evidentiary hearing. Defendant’s motion should be denied.

CONCLUSION

For the foregoing reasons, the SEC respectfully requests that this Court deny Defendant’s 

motion in limine. 

DATED: August 27, 2021 Respectfully submitted, 

By: 

 /s/Joshua E. Braunstein

 Joshua E. Braunstein

Antony Richard Petrilla

Attorneys for Plaintiff

SECURITIES AND EXCHANGE COMMISSION

100 F Street NE 

Washington, DC 20549

Telephone: (202) 551-8470

Braunsteinj@sec.gov

Lead Attorney 

Attorney to Be Noticed 

ATTORNEYS FOR PLAINTIFF 

SECURITIES AND EXCHANGE 

COMMISSION 

 

Case 1:20-cv-21254-BB Document 86 Entered on FLSD Docket 08/27/2021 Page 22 of 23
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CERTIFICATE OF SERVICE

 I hereby certify that on August 27, 2021, I caused the Plaintiff Securities and Exchange 

Commission’s Memorandum of Law in Opposition to Defendant’s Motion In Limine to Exclude 

Any Evidence Regarding Alleged Victims, Counterparties, or Harm to be served on all counsel 

of record in this case through the Court’s CM/ECF system, which automatically sends notices to 

counsel of record in this case. 

 /s/ Joshua E. Braunstein 

 Joshua E. Braunstein

ATTORNEY FOR PLAINTIFF 

SECURITIES AND EXCHANGE 

COMMISSION

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