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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF FLORIDA 

MIAMI DIVISION 

CASE NO. 1:20-CV-21254-BLOOM/LOUIS 

SECURITIES AND EXCHANGE 

COMMISSION, 

 

Plaintiff, 

v. 

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

Defendant. 

DEFENDANT’S SUR-REPLY IN RESPONSE TO 

PLAINTIFF’S MOTION FOR REMEDIES 

Defendant Justin W. Keener respectfully submits this Sur-Reply to address a new argument 

raised by the SEC for the first time in its Reply Brief to its Motion for Remedies (ECF No. 129). 

Specifically, the SEC argued for the first time in its Reply that an amendment to the Exchange Act 

enacted on January 1, 2021 overruled the Supreme Court’s decision in Liu v. SEC, 140 S.Ct. 1936 

(2020). See ECF No. 129 at 1, 3-4 (citing new Section 21(d)(7) (15 U.S.C. § 78u(d)(7)) that was 

enacted as part of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal 

Year 2021 (“NDAA”), PL 116-283, 134 Stat. 3388). This Sur-Reply is necessary because the SEC 

never cited the NDAA or Section 21(d)(7) in its Motion for Remedies, see ECF No. 124, and indeed 

never once previously argued in this case that Liu had been overruled by Section 21(d)(7), despite 

Liu being the focus of three prior SEC briefs. See ECF No. 68 at 17; ECF No. 89 at 30-32; ECF 

No. 86 at 11-14. 

The SEC’s new argument is wrong—the NDAA and Section 21(d)(7) did not overrule 

Liu. Section 21(d)(7) simply states that “the Commission may seek, and any Federal court may 

order, disgorgement.” 15 U.S.C. § 78u(d)(7). The SEC claims that because Section 21(d)(7) “does 

not contain the ‘for the benefit of investors’ language in Section 21(d)(5) that was at issue in Liu,” 

courts now have “greater flexibility” and are freed from the shackles of Liu. ECF No. 129 at 3-4. 

However, the SEC does not cite a single case supporting this theory. In fact, no court in the country 

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has held that Section 21(d)(7) impacts the interpretation of Liu in any way. Every court addressing 

an SEC disgorgement claim after Section 21(d)(7) was enacted only awarded disgorgement after 

considering whether it complied with Liu. See, e.g., SEC v. Gordon, 2021 WL 5086556, at *10 (N.D. 

Tex. Nov. 1, 2021); SEC v. Blackburn, 15 F.4th 676, 682 (5th Cir. 2021); SEC v. Dang, 2021 WL 

1550593, at *7 (D. Conn. Apr. 19, 2021). 

If Congress had intended to overrule Liu and completely redefine the meaning of 

disgorgement, it would have explicitly said so. But the statute is silent on this point. While the SEC 

essentially argues there are no longer any equitable principles the Court must consider before 

awarding disgorgement, the SEC’s interpretation is at odds with the plain language of the 

statute. Section 21(d)(7) uses the word “disgorgement” and disgorgement has a settled meaning 

defined by Liu and its predecessors. Liu, 140 S. Ct. at 1947 (“Congress does not enlarge the breadth 

of an equitable, profit-based remedy simply by using the term ‘disgorgement’ in various statutes.”) 

Moreover, the statute only authorizes disgorgement of “unjust enrichment.” 15 U.S.C. § 78u(d)(3). 

And “unjust enrichment” is an equitable remedy, which necessarily brings with it the guardrails 

around equitable remedies in existing case law. See, e.g., SEC v. Levin, 849 F.3d 995, 1006 (11th Cir. 

2017) (“Disgorgement is an equitable remedy intended to prevent unjust enrichment”); Koch Foods of 

Ala., LLC v. Gen. Elec. Cap. Corp., 303 Fed.Appx. 841, 845 (11th Cir. 2008) (“Unjust enrichment is 

an old equitable remedy”). 

The SEC’s interpretation of Section 21(d)(7) is also unconstitutional because it would 

retroactively impose a penalty. The NDAA was enacted on January 1, 2021, after this case was filed, 

but it applies to actions that were pending at the time of enactment. NDAA § 6501(b). The SEC 

argues this Court should apply the NDAA retroactively to order disgorgement without 

consideration of the equitable guardrails set forth in Liu. ECF No. 129 at 3-4. However, ignoring 

those guardrails would transform disgorgement into a penalty. Liu, 140 S. Ct. at 1944 (holding that 

disgorgement award must “not exceed a wrongdoer’s net profits” and be “awarded for victims” in 

order to be permissible equitable relief and avoid transforming into a “punitive sanction”). And the 

“retroactive imposition” of a penalty “raise[s] a serious constitutional question” because “elementary 

considerations of fairness dictate that individuals should have an opportunity to know what the law 

is and to confirm their conduct accordingly.” Landgraf v. USI Film Products, 511 U.S. 244, 265, 281 

(1994). Thus, if Congress really wanted to raise a “serious constitutional question” by authorizing 

courts to retroactively impose a punitive form of disgorgement, it would have explicitly said so. Yet 

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again, the statute is silent on this point, which undermines the SEC’s reading. Id. (courts require 

“explicit[] authoriz[ation]” to impose a retroactive penalty). 

Mr. Keener thus respectfully submits that this Court should not ignore Liu. The SEC’s 

position that a U.S. Supreme Court case no longer matters because of the NDAA is contradicted by 

the statutory language and is unconstitutional. It is also a position that has not been adopted by any 

court in the country. The SEC’s position should be rejected. 

Dated: May 10, 2022 Respectfully submitted, 

GREENBERG TRAURIG LLP

/s/Benjamin G. Greenberg ____________ 

Benjamin G. Greenberg 

Florida Bar No. 192732 

333 SE 2nd Avenue Suite 4400 

Miami, FL 33131 

Telephone: (305) 579-0850 

Facsimile: (305) 579-0717 

greenbergb@gtlaw.com

-andBUCKLEY LLP

Christopher F. Regan (pro hac vice)

Veena Viswanatha (pro hac vice) 

Adam Miller (pro hac vice) 

2001 M Street NW, Suite 500 

Washington, DC 20036 

Telephone: (202) 349-8000 

Facsimile: (202) 349-8080 

cregan@buckleyfirm.com

vviswanatha@buckleyfirm.com

amiller@buckleyfirm.com 

Counsel for Defendant Justin W. Keener

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CERTIFICATE OF SERVICE 

I hereby certify that I have this day served via ECF a true and correct copy of the foregoing 

Defendant’s Sur-Reply to Plaintiff’s Motion for Remedies to the following: 

Joshua E. Braunstein (Special Bar No. A5502640) 

Antony Richard Petrilla (Special Bar No. A5502641) 

Attorneys for Plaintiff 

SECURITIES AND EXCHANGE COMMISSION 

100 F Street NE 

Washington, DC 20549 

Telephone: (202) 551-8470 

Braunsteinj@sec.gov 

Attorneys for Plaintiff 

Securities and Exchange Commission 

This, the 10th day of May, 2022 

/s/ Benjamin G. Greenberg 

Benjamin G. Greenberg 

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