EXHIBIT 2

Case 1:20-cv-21254-BB Document 48-2 Entered on FLSD Docket 07/09/2021 Page 1 of 12
UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

____________________________________ 

 : 

SECURITIES AND EXCHANGE : 

COMMISSION, : 

 : 

Plaintiff, : Case No. 20-cv-21254 

 : 

 v. : 

 : 

JUSTIN KEENER d/b/a JMJ FINANCIAL: 

 : 

Defendant. : 

____________________________________ : 

DECLARATION OF BONNIE GAUCH IN SUPPORT OF SEC’S 

RESPONSE TO DEFENDANT’S MOTION TO COMPEL

I, Bonnie Gauch, pursuant to 28 U.S.C. § 1746, do hereby declare as follows: 

1. I am over 21 years of age and am a natural born citizen of the United States. 

2. I submit this declaration in support of the SEC’s Response to Defendant’s Motion 

to Compel. 

3. I have personal knowledge of the matters set forth in this declaration.

4. I have been employed as an attorney in the Division of Trading and Markets 

(“TM” or “Division”) for Plaintiff Securities and Exchange Commission (“SEC” or 

“Commission”) for over 20 years. 

5. I have been in charge of the Division’s Office of Interpretation and Guidance 

since 2012, as Coordinator. My duties in this position include, among other things, managing 

staffing for the office and responding to, or referring to other Divisions in the SEC or offices in 

TM, questions received from the public.

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Summary

6. I have been asked to prepare this declaration to explain: (1) the burden associated 

with identifying and producing responsive documents relating to questions and answers between 

the staff and the public from January 1, 2013 through the present regarding “apple” and 

“convertible” to comply with Judge Louis’s Order dated June 22, 2021 (“Court Order”), (2) the 

estimated burden to identify and produce documents for the 14 terms Defendant recently 

requested the SEC search, and (3) the estimated burden to identify and produce documents 

responsive to Defendant’s initial discovery requests. 

7. Regarding the Court Order, I supervised the effort to identify responsive 

documents containing either “convertible” or “apple.” There were slightly more than 1,000 hits 

for “apple” and 249 hits for “convertible.” My staff and I reviewed the hits using the manual 

process described below in paragraphs 21-27. It took 36.5 hours to complete this task, and our 

efforts uncovered only a handful of questions from the public that were related to dealer 

registration. We also ran searches for two additional terms “trader” and “factors,” but they 

returned more hits (8,000 and 2,000 respectively) than “apple” or “convertible,” and so we did 

not proceed further. 

8. I understand that the Defendant recently proposed 14 additional search terms. The 

following chart provides an estimate of the number of hits for each term in the legacy database 

employed by the Office of Interpretation and Guidance: 

Search Term Legacy Database

1. Trader 203

2. Factors 9

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3. Microcap 2

4. Statute 8

5. Discount 4

6. Spread 1

7. 144 37

8. Hold 108

9. Advertise 4

10. Business 189

11. Penny 21

12. Invest 752

13. Investment 307

14. Conference 17

Total Hits 1,662

9. Searching for these terms in the current database using an “OR” operator between 

them to eliminate duplicates,1 we observed an estimated 52,860 hits, which, when added to the 

1,662 legacy database hits for these 14 terms, totals 54,522. 

10. As paragraph 23 explains below, these are just estimates because of the databases’

limited functionality and the fact that the legacy database may include duplicates because a 

search term sometimes appears in more than one field for a given log entry and more than one 

search term may appear in a given item in the legacy database. Eliminating duplicates for this 

database across search terms involves a manual process of comparing items to identify duplicates

(although putting the data into Excel may expedite the process). 

11. As described in paragraph 26 below, the next step would be to manually review 

the items within each hit to see whether they actually are responsive.

12. Because there are approximately 54,000 hits, it would take enormous resources to 

 

1 While the search functionality for current database is not capable of the kinds of advanced searches possible in 

LexisNexis or WestLaw, it does permit some more limited use of search operators (such as “OR” between search 

terms) to attempt to eliminate duplicate results.

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review the documents because it is a manual process (see paragraphs 21-27, below). This dataset 

would be almost 44 times the size of the dataset for “convertible” and “apple,” which took us 

36.5 hours to identify, compile, and review. I believe that reviewing 44 times as many hits could 

take the staff over 1,500 hours to complete. Based upon these numbers, it would likely take less 

time to just search for the term “dealer,” for which we originally estimated 470 hours based upon 

approximately 18,000 hits. 

13. Given these numbers, it would less time to simply run the search for “dealer.” If 

we use the same process for this approach that we used to perform the reviews for “convertible” 

and “apple,” it would require the four employees in the Office of Interpretation and Guidance to 

spend approximately 3 weeks doing nothing but responding to Defendant’s request to complete 

this review. The staff who would conduct that review would have to ignore their extensive 

duties associating with responding to questions from the public, which as I explain below relate 

to much more than just dealer registration issues. 

Background on the Office of Interpretation and Guidance

14. It is my understanding that the Division developed the Office of Interpretation and 

Guidance to respond to questions from the public, some of whom are industry professionals, 

about the securities laws the Division administers. The topics do not just concern dealer 

registration. They can include virtually any part of the securities laws that the Division 

administers, including, for example, regulations on short selling, net capital rules, Regulation 

NMS, Regulation SP on privacy, and the large trader reporting rule. 

15. We receive questions via a dedicated email box and two dedicated telephone 

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lines. I understand that before I came to the office, it originally employed a physical telephone 

log to maintain a contemporaneous record of inquiries received from, and responses provided to, 

the public. That log gradually evolved through many iterations into the databases I discuss in the 

next section.

16. The staff who respond to public inquiries are instructed to inform people that we 

only provide general guidance via telephone and emails and cannot provide legal advice. It is 

our practice to refer questioners to resources on the Commission’s website wherever possible. 

For example, when responding to questions about broker-dealer registration issues, we often 

direct people to the Division’s Guide to Broker-Dealer Registration (“Guide”), available on the 

Commission’s website, which provides information about registration requirements. Regardless 

of the subject matter of the question, if a person requires a more formal answer, we tell them they 

should contact private counsel familiar with the securities laws.

17. The Guide reflects our policy of not providing legal advice to the public with the 

following disclaimer: “You may wish to consult with a private lawyer who is familiar with the 

federal securities laws, to assure that you comply with all laws and regulations. The SEC staff 

cannot act as an individual’s or broker-dealer’s lawyer. While the staff attempts to provide 

guidance by telephone to individuals who are making inquiries, the guidance is informal and not 

binding. Formal guidance may be sought through a written inquiry that is consistent with the 

SEC's guidelines for no-action, interpretive, and exemptive requests.” (Emphasis added). 

18. Since becoming Coordinator for the Office of Interpretation and Guidance, I have 

trained staff members to employ these principles in responding to phone calls or emails from the 

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public. 

Background on the Databases of the Office of Interpretation and Guidance

19. Since March 2015, the office has been using its current Share-Point database (“the 

current database”), which I helped develop with the Commission’s Office of Information 

Technology. There is a legacy database that we used previously (“the legacy database”). The 

current database has more functionality than the legacy database, although neither is designed for 

sophisticated or high-volume searching. The current database is able to maintain emails, 

including attachments to those emails, and associate them with a log entry. The legacy 

database’s functionality in this regard is much more limited because emails and their attachments 

are stored in a separate Outlook archive folder and must be retrieved manually. In addition, 

while searches of the current database will cover emails or attachments, the legacy database does 

not support that functionality. Instead, we search the legacy database for relevant log entries and 

if those entries indicate there may be a relevant email or attachment, I then look for it in the 

Outlook archive folder. Due to the way it is maintained, I am unable to run accurate searches on 

the Outlook archive folder because of limitations in the archival software. 

20. With respect to the current database, a responsive item would generally include 

the log entry, any associated emails sent to or received from the public, and any documents 

attached to such emails. With respect to the legacy database, an item would include a log entry 

and associated emails and attachments set to or from the public that would have to be retrieved 

from the separate Outlook archive folder. For purposes of this declaration, I refer to each log 

entry and any associated emails and attachments that we receive from, or send to, the public as 

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one “Item.” 

The Manual Search Process

21. As discussed in greater detail below, the burden to search for responsive 

documents within the current and legacy databases can be considerable, primarily because the 

systems used to maintain records of public inquiries to the Office of Interpretation and Guidance 

were not designed for advanced searches. For example, the method we have to search the legacy 

database does not allow the use of Boolean search terms. Instead, we can search only one word 

at a time. 

22. Searching the legacy database is more cumbersome because we have to search 

each of nine data fields separately to ensure that we capture all relevant documents. Once we 

have gathered the results, the staff must then combine them and remove any duplicates that may

arise if the search term appears in more than one field for a given log entry. Once we identify a 

responsive log entry that includes a search term, I then review the Outlook archive to determine 

if we have any emails to include as part of that Item.

23. Although searching the current database will return results that include log 

entries, related emails and attached documents containing the search term, it too is cumbersome 

to search. Each page of search results contains only ten hits, and the staff must scroll through a 

significant number of pages to review search results. Because the system was not designed to 

calculate with a high degree of accuracy the number of times a search term appears in the current 

database, it has been our experience that the total number of hits appearing at the bottom of each 

page of search results may be inaccurate and may even change from page to page as we progress 

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through the search results. We attempt to determine the total number of hits by clicking through 

every page of the search results. Based upon our experience in answering Defendant’s requests, 

the actual number of hits can be somewhat different than the number of hits indicated on the first 

page of the search results.2

 

24. The current database does not have functionality to export the list of search 

results. Instead, creating a list of hits requires us to run the search and then, for each of the ten 

hits on each page, manually click a link to the hit to select it, copy the hit using Ctrl-C, and paste 

it into a spreadsheet using Ctrl-V. It is not possible to select all the text on the page and then 

copy and paste it into a spreadsheet (or other document) because the links to the hits (which also 

contain information identifying the relevant log entry for each hit) become truncated using that 

approach and are thus not usable. Because the link to each hit must be clicked, copied, and 

pasted using this approach, simply creating the list of hits is a time-consuming and burdensome 

process.

25. The staff member who compiled the lists of search results for the terms 

“convertible” and “apple” has informed me that the process took 14.5 hours. 

26. The next step in the process is reviewing the hits for responsiveness. That means 

determining that a document containing a hit actually concerns communications with the public 

about a dealer registration issue. To make this determination, we carefully read the log entries 

and, if appropriate, the associated emails and attached documents. 

 

2 The 52,860 hits in the current database for the proposed 14 additional search terms, discussed 

in the Summary, is an estimate based on the hit count from the first page of the search results. 

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27. To expedite this task in order to meet the Court’s deadline for the June 25, 2021 

production, I assigned the review task to multiple staff members, including myself. For the term 

“convertible,” the search resulted in 249 total hits relating to 137 separate log entries. This 

means that there were 249 instances in which the term “convertible” appeared one or more times 

either in a log entry, email, or document attached to an email. We determined that there were 4 

responsive items in those hits. For the term “apple,” there were 1,030 hits relating to 691 

separate log entries. We determined that 13 hits associated with 10 log entries were responsive. 

I worked with three other people—all of whom set aside their regular work—to complete this 

review process in 22 hours. 

Previous Time Estimates

28. My staff and I developed time estimates for identifying and producing documents 

responsive to Defendant’s Interrogatory No. 6 and Defendant’s Second Set of Requests for 

Production. The latter of those requests originally called for “all Documents reflecting questions 

received by the Office of Interpretation and Guidance ... Concerning Section II.B of the Guide 

(‘Who is a “Dealer”’).” That is an extremely broad request. And, because our databases use the 

term “broker-dealer” without separating “broker” materials from “dealer” materials, we would 

have to review every database entry concerning the registration of broker-dealers. In my 

experience, there are far more questions related to broker registration, than to dealer registration. 

For that reason, and also because of the cumbersome search process described in the previous 

section, we estimated that it would take 470 hours to identify the requested documents. 

29. Now that we have actually completed one extensive search of the database (for 

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“convertible” and “apple”), we see that our original estimate was consistent with the actual 

results. There were approximately 18,000 hits for the term “dealer.” Based on the fact that it 

took us 36.5 hours to complete our review of the 1,249 hits on the terms “apple” and 

“convertible,” we believe (by extrapolation) that it would take us over 500 hours to complete the 

18,000 hits for the term “dealer.” Our estimate of 470 hours for the original request was, if 

anything, understated. In performing the search for the term “apple,” it was somewhat easier to 

tell if a document was non-responsive, because the word “apple” frequently showed up in items 

that had nothing to do with dealer registration. When we search for the term “dealer,” there is a 

much higher likelihood that the resulting documents will relate to dealer registration, and we will 

have to read them much more carefully to weed out the non-responsive documents. 

Whistleblower Information 

30. The process I have described so far does not include any review of the Items for 

protected whistleblower status. In my experience, the current and legacy databases contain 

materials from whistleblowers, whose identities may be protected from disclosure under federal 

law. Whistleblowers sometimes file multiple complaints with the agency, using both the 

standard Tips, Complaints, and Referrals (“TCR”) database and the email box for the Office of 

Interpretation and Guidance. Once a complainant requests whistleblower status in a TCR 

submission, the agency is bound by law to honor that request for all of its operations, including 

with regard to the databases for the Office of Interpretation and Guidance. 

31. I understand that Defendant is not seeking complaints that are filed with the SEC 

(only questions about the dealer registration requirements), and so submissions from

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whistleblowers would not be responsive. However, the SEC still has to review the documents to 

make sure they do not contain any whistleblower documents. 

32. I understand that attorneys associated with this litigation will separately review 

any responsive Items for protected whistleblower materials. My time estimates above do not 

include their time to conduct this review (or any steps to produce documents to Defendant, 

including bate stamping or drafting privilege logs). 

I declare under penalty of perjury that the foregoing is true and correct. 

 

Executed on July 9, 2021: 

 

 

______________________________________ 

 Bonnie Gauch 

 United States Securities and Exchange Commission

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