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.

)

)

)

)

)

)

)

)

)

)

)

)

No. 20-cv-21254 

Hon. Beth Bloom 

PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S OPPOSITION 

TO DEFENDANT’S MOTION FOR SUMMARY JUDGMENT 

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TABLE OF CONTENTS

INTRODUCTION ...........................................................................................................................1

CORRECTIONS TO DEFENDANT’S FACTS .............................................................................3

SUMMARY JUDGMENT STANDARD .......................................................................................5

ARGUMENT...................................................................................................................................6

A. The Undisputed Facts Establish That Defendant Operated As An Unregistered 

Dealer.......................................................................................................................6

1. The Plain Language Of The Statute And Eleventh Circuit Precedent Control.....6

2. Defendant Cannot Rewrite The Statute To Fit His Needs....................................8

3. Although The Factors Contained In The SEC’s Guide May Be Instructive, 

They Do Not Supplant The Law ........................................................................10

4. Defendant’s Business Activities Meet His Own Four Factor Test.....................14

5. Defendant’s Remaining Contentions Regarding His Status As A Dealer Lack 

Merit....................................................................................................................16

B. Defendant’s Due Process/Fair Notice Argument Fails As A Matter Of Law........20

C. Defendant’s Disgorgement Arguments Are Both Premature And Without 

Merit.......................................................................................................................24

D. Defendant’s Challenge to Injunctive Relief Is Premature And Meritless..............26

CONCLUSION..............................................................................................................................27

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TABLE OF AUTHORITIES

CASES

Bonner v. City of Prichard, 

661 F.2d 1206 (11th Cir. 1981) ...........................................................................................7

Brice v. Haynes Invest., LLC, 

Case No. 18-cv-01200-WHO, Case No. 19-cv-01481-WHO, 2021 WL 2936733 (N.D. 

Cal. July 13, 2021).............................................................................................................25

CBS Inc. v. PrimeTime 24 Joint Venture,

245 F.3d 1217 (11th Cir. 2001) .....................................................................................9, 11

Chapel Invs., Inc. v. Cherubim Ints., Inc., 

177 F. Supp. 3d 981 (N.D. Tex. 2016) ..............................................................................14

Chevron U.S.A., Inc. v. Nat. Res. Def. Council, 

467 U.S. 837 (1984)...........................................................................................................12

Christopher v. SmithKline Beecham Corp., 

567 U.S. 142 (2012)...........................................................................................................23

City of South Miami v. DeSantis, 

408 F. Supp. 3d 1266 (S.D. Fla. 2019) ..............................................................................21

Clark v. Coats & Clark, Inc.,

929 F.2d 604 (11th Cir. 1991) .............................................................................................5

Eastside Church of Christ v. National Plan, Inc., 

391 F.2d 357 (5th Cir. 1968) ...................................................................6, 7, 11, 12, 13, 22

FCC v. Fox Television Stations, Inc., 

567 U.S. 239 (2012)...........................................................................................................23

FTC v. Wyndham Worldwide Corp.

799 F.3d 236 (3d Cir. 2015).......................................................................................... 9, 22

Gordon Wesley Sodorff, Jr., 

50 S.E.C. 1249, 1992 WL 224082 (Sep. 2, 1992) ...........................................16, 17, 18, 19

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Heckler v. Community Health Servs., Inc.,

467 U.S. 51 (1984).............................................................................................................23

Hickson Corp. v. N. Crossarm Co., 

357 F.3d 1256 (11th Cir. 2004) ...........................................................................................5

Kaiser Aluminum & Chem. Corp. v. Bonjorno, 

494 U.S. 827 (1990).............................................................................................................6

Liu v. SEC,

140 S. Ct. 1936 (2020).......................................................................................................24

PHH Corp. v. CFPB, 

839 F.3d 1 (D.C. Cir. 2016)...............................................................................................23

Pub. Employees’ Ret. Sys. of Miss. v. Merrill Lynch & Co., 

714 F. Supp. 2d 475 (S.D.N.Y. 2010)................................................................................12

Rojas–Reyes v. I.N.S.,

235 F.3d 115 (2d Cir. 2000)...............................................................................................23

SEC v. Almagarby, 

479 F. Supp. 3d 1266 (S.D. Fla. 2020) ......................................................................Passim

SEC v. Big Apple Consulting USA, Inc., 

783 F.3d 786 (11th Cir. 2015) ...................................................................................Passim

SEC v. Blackburn, 

Case No. 15-2451, 2020 WL 10787527 (E.D. La. Nov. 3, 2020) .....................................25

SEC v. Calvo, 

378 F.3d 1211 (11th Cir. 2004) .........................................................................................27

SEC v. Federated All. Grp., 

No. 93-CV-0895E(F), 1996 WL 484036 (W.D.N.Y. Aug. 21, 1996)...............................14

SEC v. Ginsburg,

No. 99-8694-CV-RYSKAMP, 2002 WL 1835810 (S.D. Fla. July 8, 2002)....................25

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SEC v. Kramer, 

778 F.Supp.2d 1320 (M.D.Fla. 2011)................................................................................14

SEC v. Nat’l Presto Indus., Inc., 

486 F.3d 305 (7th Cir. 2007) .............................................................................................12

SEC v. Ridenour, 

913 F.2d 515 (8th Cir. 1990) .......................................................................................17, 19

SEC v. River North, 

415 F. Supp. 3d 853 (N.D. Ill. 2019).....................................................................16, 17, 19

Upton v. SEC,

75 F.3d 92 (2d Cir. 1996)...................................................................................................23

Vaughn v. C.I.R., 

85 F.2d 497 (2d Cir. 1936)...................................................................................................9

STATUTES

15 U.S.C § 78c(a)(5)....................................................................................................................1, 6

15 U.S.C § 78c(a)(5)(A) ................................................................................................................12

15 U.S.C § 78c(a)(10)....................................................................................................................14

15 U.S.C. § 78o(a)(1)...................................................................................................................1, 6

15 U.S.C. § 78z..............................................................................................................................23

OTHER AUTHORITY

Cont’l Grain Co., 

SEC No-Action Letter, 1987 WL 108902, (Nov. 6, 1987)................................................10

Definition of Terms in and Specific Exemptions for Banks, Savings Associations, and Savings 

Banks Under Sections 3(a)(4) and 3(a)(5) of the Securities Exchange Act of 1934, 

SEC Release No. 34-47364, 2003 WL 328058 (Feb. 13, 2003)......................................19

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Fairfield Trading Corp., 

SEC No-Action Letter, 1988 WL 233618 (Jan. 10, 1988) ................................................10

Louis Dreyfus Corp., 

SEC No-Action Letter, 1987 WL 108160 (July 23, 1987)................................................11

Nat’l Council of Sav. Instit., 

SEC No-Action Letter, 1986 WL 67129 (June 26, 1986) .................................................10

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

[DE 138].............................................................................................................................25

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Pursuant to Rule 56(a) of the Federal Rules of Civil Procedure and Local Rule 56.1, 

plaintiff, United States Securities and Exchange Commission (the “Commission” or “SEC”), 

respectfully submits this opposition to the motion for summary judgment submitted by 

Defendant Justin W. Keener d/b/a JMJ Financial (“Defendant”).

INTRODUCTION

The Court should deny Defendant’s motion for summary judgment (“Def. MSJ”) for 

several reasons, foremost because in its own motion for summary judgment the SEC has proven 

its case against him as a matter of law. See DE 68. 

First, there is no genuine issue of material fact that Defendant is an unregistered dealer, 

and not a “trader,” under the plain and unambiguous language of Sections 3(a)(5)(A) and 

15(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78c(a)(5)(A) 

and 78o(a)(1) (“dealer registration statute" or “statute”) and controlling Eleventh Circuit Law. 

Second, even if, as Defendant urges, the SEC’s Guide to Broker-Dealer Registration (“Guide”)1

were the “controlling law” on dealer registration—and it is not—Defendant’s securities business 

would still unquestionably meet various factors that the Guide provides for determining if 

particular operations meet the statutory definition of the term “dealer.” Third, Defendant’s Due 

Process fair notice argument (hereinafter “Due Process”) fails because the dealer registration 

statute is clear and unambiguous, the Eleventh Circuit has clearly interpreted the statute, and the 

Guide squarely instructs readers that they are required to follow the law. Finally, Defendant has 

conceded that the SEC’s requests for disgorgement and an injunction are premature and should 

 1 See Plaintiff’s Opposition Statement of Material Facts (hereinafter “OSMF”), at ¶ 106

(“The Division of Trading and Markets has put staff guidance on SEC.gov titled Guide to 

Broker-Dealer Registration.”).

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not be decided until after liability is determined, and his legal arguments challenging these forms 

of equitable relief are otherwise without merit. 

The SEC’s motion for summary judgment demonstrates that, from at least 2010

Defendant was engaged in a commercial enterprise in which he purchased hundreds of 

convertible notes, converted those notes into billions of shares of newly issued securities, sold 

those shares into the public market, and made millions of dollars in profits—making him a 

dealer, as a matter of law, under the plain language of the dealer registration statute and Eleventh 

Circuit law. Further, the SEC’s MSJ also unquestionably demonstrates—consistent with factors 

in the Guide—that, among other things, Defendant: (1) advertised through various means to the 

public and his issuer clients that he was in the securities business, and stood ready, willing and 

able to buy millions of dollars in convertible notes in 2015 and 2016; (2) had numerous issuer 

clients with whom he conducted thousands of transactions; and (3) bought securities with a view 

toward distributing them. Thus, even applying Defendant’s cherry-picked factors from the 

Guide, he was operating as an unregistered “dealer” in violation of the dealer registration statute. 

Defendant cannot avoid the ramifications of the unambiguous language of the statute and 

Eleventh Circuit law by adding his preferred language to the dealer registration requirements that 

do not appear in the statute or in the controlling precedent. 

Defendant’s allegation that the SEC’s claim violates Due Process because he lacked fair 

notice that his conduct was illegal is meritless. As this Court observed in denying his motion to 

dismiss in August 2020, Defendant failed then to contend that any language in the dealer 

registration statute is ambiguous. More than a year later, he still fails to contend that the dealer 

registration statute is ambiguous. Instead, Defendant has cobbled together selected phrases from 

SEC Guidance, which he uses to: (1) falsely assert that the SEC has changed its views on the 

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Exchange Act’s definition, and (2) unpersuasively contend that the SEC is confused about what 

the dealer registration statute prohibits. These claims fail to articulate, let alone meet, the 

standard for establishing a Due Process defense.

Defendant had clear notice that his conduct was illegal based upon the plain language of 

the statute, the Eleventh Circuit’s decision in SEC v. Big Apple Consulting USA, Inc. 783 F.3d 

786 (11th Cir. 2015), and the Guide. Moreover, as the undisputed facts show, and this Court also 

found, Defendant is not a novice investor—he has a long history operating in the securities 

industry. As it did at the pleading stage, the Court should reject Defendant’s Due Process 

defense. 

 Defendant’s disgorgement and injunctive relief arguments are premature and wrong. As 

he has now conceded, both disgorgement and injunctive relief are equitable remedies, which the 

Court determines after liability. See DE 87 at 8 (Def. Opposition to SEC Omnibus MIL). Thus, 

the Court should address them after liability has been determined. 

The Court should deny Defendant’s MSJ because it is fails to establish that the SEC 

cannot meet the elements of its claim. Rather, the undisputed facts demonstrate that Defendant 

was in the business of buying convertible notes, converting those notes to shares, and selling 

those shares into the public market. Those facts establish, as a matter of law, that Defendant was 

operating as an unregistered dealer in violation of the dealer registration statute and the Eleventh

Circuit law interpreting it. 

CORRECTIONS TO DEFENDANT’S FACTS

In the statement of material facts in support of MSJ, Defendant mischaracterizes some of 

the well-established facts. The SEC here corrects only some of Defendant’s factual statements

and provides support for those corrections. 

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In his MSJ Defendant asserts that: “For a limited period of approximately two years, Mr. 

Keener invested in convertible notes in the microcap space (the investments at issue in this 

case).” Def. MSJ at 4. This is untrue. Defendant started purchasing convertible notes as early 

as 2009, when he obtained a note from a company called mPhase Technologies. OSMF at ¶ 11. 

On December 22, 2014, Defendant entered into a contract to sell 44 non-performing convertible 

notes to River North Equity. Id. In the contract, Defendant represented that: “JMJ Financial . . .

is an active manager of investments in convertible notes with over 220 convertible notes in its 

portfolio.” Id. Defendant purchased those notes between December 18, 2009 (mPhase 

Technologies) and May 22, 2014 (Bill the Butcher). Id. The total balance owed on those notes 

at the time of sale exceeded $5.4 million. Id. 

Defendant also asserts that he “has no customers.” Def. MSJ at 2. In fact, Defendant’s 

customers—or “clients,” as he called them—were the issuers who sold him convertible notes. 

Defendant’s expert witness Dr. Oldfield admitted that the issuers were his “clients,” 

notwithstanding his unpersuasive attempt to distinguish Defendant’s “clients” from customers. 

See OSMF at ¶ 103 (Oldfield stated: “a client is someone in whom you have a long-term 

economic interest, whereas a customer is someone you do an immediate transaction with”). 

Defendant’s own accounting database used the field “client_id” to refer to the microcap issuers. 

Id. at ¶ 102.

Defendant also asserts that: “Generally speaking, the notes functioned as follows. Mr. 

Keener made a loan to a company of approximately $25,000 to $100,000.” Def. MSJ at 5. This 

statement fails to account for the many convertible notes with prices that exceeded $100,000. In 

her summary declaration, Dr. Taveras calculated that Defendant spent approximately 

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$51,919,658 purchasing 272 convertible notes between July 2010 and April 2018. DE 67-11 at ¶ 

17 and Ex. 4, page 12 of 20. Applying simple division, the average price per note was $190,881.

In his MSJ, Defendant asserts that he “has never sold a single share directly to any 

member of the investing public.” Def. MSJ at 2. But as Defendant’s own expert, Dr. Mayhew,

explained, virtually all trades in the OTC market occur with a market maker on both sides of the 

transaction. DE 72-26 at 135:10 – 136:5. Private party transactions in which retail customers 

trade directly with each other (for example, by exchanging physical stock certificates) are rare. 

Id. at 136:6 - 137:15. Thus, there would have been few occasions in which Defendant ever 

would have sold shares directly to any member of the investing public.

SUMMARY JUDGMENT STANDARD

Federal Rule of Civil Procedure 56 provides that “[t]he court shall grant summary 

judgment if the movant shows that there is no genuine dispute as to any material fact and the 

movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party 

bears the initial burden of showing the Court that there is no genuine dispute as to any material 

fact that should be decided at trial. Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260 

(11th Cir. 2004). Where, as here, the nonmoving party has the burden of proof at trial, 

the moving party may carry its burden at summary judgment either by presenting evidence 

negating an essential element of the nonmoving party's claim, or by pointing to specific portions 

of the record that demonstrate that the nonmoving party cannot meet its burden of proof at trial. 

See Clark v. Coats & Clark, Inc., 929 F.2d 604, 606–608 (11th Cir. 1991) (discussing Adickes v. 

S.H. Kress & Co., 398 U.S. 144 (1970) and Celotex Corp. v. Catrett, 477 U.S. 317 (1986)). 

Defendant has not met the standard for either option. Pursuant to the plain language of the dealer 

registration statute, Defendant’s motion must fail as the undisputed facts demonstrate that he 

was, as a matter of law, operating as an unregistered dealer. 

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ARGUMENT

A. The Undisputed Facts Establish That Defendant Operated As An Unregistered 

Dealer

1. The Plain Language Of The Statute And Eleventh Circuit Precedent 

Control

Defendant’s MSJ fails, among other reasons, for ignoring that statutory interpretation 

begins with the plain language itself. Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 

827, 835 (1990). The unambiguous, plain language of the Exchange Act states that “any person 

engaged in the business of buying and selling securities ... for such person’s own account 

through a broker or otherwise” is a dealer who must register with the Commission pursuant to 

Section 15(a)(1). See 15 U.S.C. §§ 78c(a)(5) and 78o(a)(1). The Eleventh Circuit has 

interpreted “engaged in the business” to mean, operating “[a] commercial enterprise carried on 

for profit, a particular occupation or employment habitually engaged in for livelihood or gain.” 

Big Apple, 783 F.3d at 790, 809. The undisputed facts show that for more than a decade 

Defendant has, as part of a “commercial enterprise carried on for profit,” bought securities in the 

form of convertible notes, converted them to stock, and then sold billions of shares of that stock 

into the public market from his own accounts using brokerage firms. DE 67 at ¶¶ 8, 9, 13, 17. 

Defendant has long operated a sophisticated business enterprise with as many as 25 

employees, millions of dollars in databases and software, and an advertising strategy worthy of a 

large corporation. Id. at ¶¶ 6, 23, 41-66. Defendant’s convertible notes business was prolific and 

profitable (contrary to his false assertions that he lost money), and as the SEC’s MSJ amply 

demonstrates, DE 68, he unmistakably meets the plain language of the definition of “dealer” in 

the Exchange Act as well under the analysis in Big Apple and Eastside Church. See Big Apple,

783 F.3d at 809 (applying the plain language of the statute, defendant that provided investor and 

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public relations services to penny stock companies was a dealer where as part of its regular 

business it received and sold discounted shares of stock as payment); Eastside Church of Christ 

v. National Plan, Inc., 391 F.2d 357, 362 (5th Cir. 1968) (finding defendant was a dealer because 

it purchased many church bonds and sold some of them for its own account as a part of a regular 

business);

2 see also See SEC v. Almagarby, 479 F. Supp. 3d 1266, 1268 (S.D. Fla. 2020) (Court 

granted summary judgment in favor of SEC where defendant obtained aged debt of penny stock 

companies, received shares of their stock at deep discounts to satisfy the debt, and sold the shares 

into the public market as a commercial, for-profit enterprise). 

Indeed, in its MSJ, the SEC detailed the volume of Defendant’s business and the profits

he garnered from his unlawful unregistered dealer activity. See DE 68 at 8-9 (SEC MSJ); DE 67 

at ¶¶ 27-37 (SEC’s Statement of Material Facts (“SMF”)); see also DE 67-11 at ¶ 3 (Declaration 

of Carmen A. Taveras, Ph.D., in Support of Plaintiff’s Motion for Summary Judgment)

(“Taveras Decl.”) (summarizing convertible note transactions). The undisputed facts 

demonstrate that: 

• Between July 2010 and April 2018, Defendant bought more than 272 convertible 

notes from 201 different issuers. 

• Defendant paid these issuers approximately $52 million for these notes and related 

warrants.

 

• 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. 

 2 The Eleventh Circuit has adopted, as binding precedent, all decisions of the former Fifth

Circuit handed down prior to close of business on September 30, 1981. Bonner v. City of 

Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).

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• 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. 

DE 68 at 8-9 (emphasis added); DE 67 at ¶¶ 34-35; DE 67-11 at ¶ 3.

Thus, as a matter of law, Defendant was in the “business” of buying and selling securities 

for his own account. For the reasons stated in the SEC’s motion for summary judgment, the 

Court should grant summary judgment against Defendant and deny the instant motion. See DE 

68 at 10-30.

2. Defendant Cannot Rewrite The Statute To Fit His Needs

Ignoring the unambiguous, plain language of the statute and the binding precedent in this 

Circuit, Defendant attempts to rewrite the statutory definition of the term “dealer,” and in 

particular, the words “engaged in the business.” Def. MSJ at 8-9. Defendant relies upon three

non-binding sources from the 1930s—an SEC report, a Second Circuit tax case, and a 

stockbroker text—and he claims that the words of the statute must be interpreted based upon 

selective portions of those materials. Id. Applying his personalized construction, Defendant 

claims that dealers must be “in the business of providing financial services to customers” and are

only those who “sell securities to the investing public.” Id. He is wrong.

First, there is no statute, rule, regulation, or binding precedent that includes Defendant’s 

new definition of the term “dealer” or otherwise restricts the Exchange Act’s definition to his 

terms. The plain language neither limits “dealers” to only those who provide financial services

to clients, nor to those who only sell securities to the investing public. The plain language does 

not even include the term “financial services,” and specifically includes those who “buy” as well 

as “sell” securities as a business. As discussed above, the Eleventh Circuit has interpreted 

“engaged in the business” to mean, “[a] commercial enterprise carried on for profit, a particular 

occupation or employment habitually engaged in for livelihood or gain.” Big Apple, 783 F.3d at 

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809. Courts in this District have applied Big Apple to sellers of stock obtained directly from the 

issuer as part of a regular business. See Almagarby, 479 F. Supp. 3d at 1272. 

Second, “[t]he court not the agency is the ultimate arbiter of the statute’s meaning.” FTC 

v. Wyndham Worldwide Corp., 799 F.3d 236, 251 (3d Cir. 2015) (citing Skidmore v. Swift & Co. 

323 U.S. 134, 140 (1944). SEC reports, guidance, scholarly articles, and treatises, while 

instructive, are not binding on this Court and cannot change the plain language of the statute or 

the Eleventh Circuit’s interpretation of it. “[W]here the meaning of a statute is discernible in 

light of canons of construction, [courts] should not resort to legislative history or other extrinsic 

evidence.” CBS Inc. v. PrimeTime 24 Joint Venture, 245 F.3d 1217, 1225 (11th Cir. 2001).

Finally, the three 1930s sources upon which Defendant relies do not assist him. The SEC 

report he attaches as an exhibit to his MJS does not address the definition of “dealer” in the 

Exchange Act, but instead notes the results of a feasibility study on segregating the functions of 

brokers and dealers. Nonetheless, specific language in the report precisely describes 

Defendant’s business, in describing what dealers do, stating in part, “The dealer ... buys 

securities from his customer with a view to disposing of them elsewhere.” Def. MSJ at 9 & Ex. 

A at 4 (emphasis added). Defendant bought securities from his issuer clients with a view to 

converting the notes into new issues of stock and selling those into the public market. Next, 

Defendant’s reliance on a Second Circuit tax case is similarly unavailing, as it did not address 

the definition of “dealer” in the Exchange Act, but instead examined whether the defendant was 

a “dealer” for purposes of determining net income in 1929 pursuant to the applicable tax 

regulation. Vaughn v. C.I.R., 85 F.2d 497, 499 (2d Cir. 1936). Finally, Defendant’s reliance 

upon a 1933 textbook is equally inapposite, as it was published before the Exchange Act was 

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enacted, and did not address the definition of “dealer” at issue here. Def. MSJ at 9 & Ex. B at 1, 

4. 

3. Although The Factors Contained In The SEC’s Guide May Be 

Instructive, They Do Not Supplant The Law

In his MSJ, Defendant does not meaningfully confront the statutory language or the 

seminal cases relating to dealer registration. Instead, he spends the bulk of his arguments on the 

proposition that various forms of SEC guidance—including the informational Guide on the

SEC’s website—and not the statutory language and case law should control the Court’s analysis. 

Def. MSJ at 10. This argument fails. 

Specifically, Defendant asserts that, “the SEC has codified a factors-based understanding 

of the dealer definition in a plethora of Commission Releases, no-action letters, and other 

published guidance that constitute the controlling law that now applies to determining whether 

a person is a securities dealer.” Id. at 10-15 (emphasis added). After chronicling some of these 

sources, Defendant focuses on the Guide, which he asserts “summarizes and restates the factors 

from the prior SEC releases,” all of which “focus on services to the investing public.” Id. at 12-

13.

3

 In doing so, Defendant wholly ignores this Court’s prior finding that SEC guidance is not 

 3

 In fashioning his factor based test, Defendant relies upon an array of SEC “no-action” 

letters from the late 1980s, none of which support his position. Defendant asserts that the “SEC 

has repeatedly reassured market participants through no-action letters that it would not take 

action against unregistered firms when those firms did not meet this factors-based analysis, 

including when the firms had ‘no customers’ and did ‘not stand ready to purchase or sell 

securities in general.’” Def. MSJ at 11, n.3-12. Notwithstanding that no-action letters do not 

have the force of law, these particular no-action letters fail to support his claims as they focus on 

factors that, as discussed, show that Defendant operated as a dealer. As amply demonstrated in 

the SEC’s MSJ, Defendant: (1) has customers, (2) holds himself out as providing services and 

quoting a market for securities; and (3) stands ready to purchase or sell securities in general. See 

Nat’l Council of Sav. Instit., SEC No-Action Letter, 1986 WL 67129 at *2 (June 26, 1986) (focus 

on handling other people’s securities, holding oneself out as willing to buy and sell securities,

and willing to provide a service); Cont’l Grain Co., SEC No-Action Letter, 1987 WL 108902, at 

*1, 4 (Nov. 6, 1987) (declining to take action after applying 10 factors); see also Fairfield 

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binding and cannot supplant the plain language of the statute or the Eleventh Circuit’s 

interpretation of it. DE 29 at 8; PrimeTime 24 Joint Venture, 245 F.3d at 1225 (under cannons of 

construction, courts should not resort to extrinsic evidence); see also SEC v. Almagarby, 479 F.

Supp. 3d at 1273 (“SEC no-action letters are not binding pieces of legislation . . . . They are not 

rulings of the [SEC] or its staff on questions of law or fact and are not dispositive of the legal 

issues raised as to the applicability of the federal securities laws to a given transaction.”)

(internal quotation marks and citation omitted). 

In accordance with this well-established principle, the Guide makes clear that it is only to 

be used as an interpretive aid. It specifically warns readers in bold-face type “CAUTION –

MAKE SURE YOU FOLLOW ALL LAWS AND RULES,” it advises them that the SEC 

cannot act as the reader’s attorney, and it states that the reader may wish to consult an attorney 

with respect to whether they are required to register as dealers. OSMF, Exhibit 5, at page 3 of 

31. 

Defendant acknowledges this Court’s decision denying his motion to dismiss for the 

limited proposition that the factors in the SEC guidance are “relevant for assessing and 

ultimately concluding whether a party is a dealer.” Id. at 8 (emphasis added). However, he 

simply ignores the significant distinction between “relevant” and “controlling” authorities. 

Nothing this Court has held or stated could reasonably be interpreted to mean that it believes that 

SEC guidance supersedes or supplants the plain language of the dealer registration statute or the 

decisions in Big Apple and Eastside Church. To the contrary, the rest of the sentence in this 

Court’s opinion from which Defendant draws the quoted language reads: “[T]hey [the factors] do 

 

Trading Corp., SEC No-Action Letter, 1988 WL 233618, at *2 (Jan. 10, 1988) (same); Louis 

Dreyfus Corp., SEC No-Action Letter, 1987 WL 108160, at *2 (July 23, 1987) (same).

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not supplant the statute’s plain language, especially at this [the pleadings] stage.” See DE 29 at 

8 (emphasis added).

Defendant’s citation to Chevron U.S.A., Inc. v. Nat. Res. Def. Council, 467 U.S. 837, 

843-44 (1984), is not remotely on point because it discusses deference to agency “regulations”

only if the underlying statute contains a “gap left, implicitly or explicitly, by Congress.” See 

Def. MSJ at 10. Congress left no gaps here, but specifically defined the term “dealer” as 

someone in the business of buying and selling securities for his own account. See 15 U.S.C. § 

78c(a)(5)(A). In addition, there is no SEC rule or regulation defining the term dealer. The Guide 

or the guidance on the Commission’s website surely does not qualify as a regulation or gap 

filling measure in any event, as it was not subject to the rulemaking process under the 

Administrative Procedures Act. An agency exercises its authority to fill gaps in a statutory 

scheme by promulgating regulations. But despite Defendant’s confusing arguments, the SEC’s 

charges are based upon the plain language of a federal statute and not any SEC rule or 

regulation.4 

There is no question that Defendant’s attempt to elevate SEC guidance to controlling law 

is part of his effort to avoid the plain language of the statute and the holdings in Big Apple and 

Eastside Church. If the investor relations firm in Big Apple is a dealer because it received

payment for services in the form of discounted stock (which it then sold in the market), then

obviously a securities professional like Defendant, whose “entire business model was predicated 

on the purchase and sale of securities,” is also a dealer. See Big Apple, 783 F.3d at 809-810

 4 Defendant also cites several decisions from courts outside the Eleventh Circuit that have 

nothing to do with dealer registration and are not persuasive authority in any respect. See SEC v. 

Nat’l Presto Indus., Inc., 486 F.3d 305, 315 (7th Cir. 2007); Pub. Employees’ Ret. Sys. of Miss. 

v. Merrill Lynch & Co., 714 F. Supp. 2d 475, 481-82 (S.D.N.Y. 2010).

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(emphasis added). One would come to the same conclusion comparing Defendant to the buyer 

and seller of church bonds in Eastside Church, 391 F.2d at 362.

 Recognizing the devastating impact on his arguments, Defendant attempts to distinguish 

the holding in Big Apple as mere dicta and on the grounds that the investor relations firm there 

interacted with the investing public and was also involved in a fraud. Def. MSJ at 19, n. 4. The 

Court’s holding that the investor relations firm was operating as dealer was not dicta; rather the 

Court upheld the lower court’s decision on a motion for summary judgment based on the 

definition of the term “dealer.” See Big Apple, 783 F.3d at 809. Further, Defendant does not, 

and cannot, explain how his own website, Twitter account, and sales employees—all of which

Defendant used to market services to issuers—were meaningfully different from the contact that 

the investor relations firm in Big Apple had with the public, or how Defendant’s purchase of 

convertible notes was not a service to issuers (i.e., providing liquidity and extending credit) in 

exchange for notes he typically converted into shares of penny stock. 

Defendant’s attempt to distinguish Big Apple because the case also involved fraud 

charges is similarly unavailing because the Eleventh Circuit did not consider any form of fraud 

in concluding that the defendant was a dealer. He also argues that Big Apple does not stand for 

the proposition that “a dealer ... is someone who earns most of their income from selling stock.” 

Def. MSJ at 19. And that is true. But Big Apple actually holds that someone who operates a 

“commercial enterprise” where their “entire business model was predicated on the purchase and 

sale of securities” bought from the issuer at “deep discounts” is a dealer. Id., 783 F.3d at 809-10. 

Defendant meets each of those criteria.

Notably, Defendant only briefly addresses the Almagarby case by observing that it is 

“factually distinguishable” and that it “followed Big Apple and focused exclusively on 

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defendant’s volume of trading activity.” Def. MSJ at 19. But Defendant’s casual dismissal of 

that recent case misses the Court’s finding that Almagarby’s entire business model was based 

upon exchanging issuer debt for discounted stock received directly from the issuers and, like 

Defendant, selling the newly issued shares into the public market. See Almagarby, 479 F. Supp. 

3d at 1272. 

4. Defendant’s Business Activities Meet His Own Four Factor Test

Defendant insists that four factors that he selects from the Guide constitute the legally 

binding test to determine whether someone is a “dealer.” According to Defendant, dealers are 

persons who: (1) do business with the public; (2) quote prices for the purchase and sale of 

securities or provide services to investors; (3) advertise that they are willing to buy and sell a 

particular security on a continuous basis; and (4) issue, originate, or underwrite securities. Def. 

MSJ at 12-13. After contending that these factors are themselves controlling law as to the sole 

issue in this case (and they are not), Defendant then asserts that he meets none of the factors and, 

therefore, is not a dealer.5

 

 5 Defendant cites to three cases to support his proposition that these four factors are 

central to determining whether he was a dealer. Def. MSJ at 13. None of these cases support 

Defendant’s assertions. First, Defendant misquotes SEC v. Kramer, 778 F. Supp. 2d 1320, 1334 

(M.D. Fla. 2011), a case that identifies factors that courts have adopted to determine if someone 

is a broker; not a dealer, as he modifies the quote to suggest. Second, the Court in SEC v. 

Federated All. Grp., No. 93-CV-0895E(F), 1996 WL 484036, at *4-5 (W.D.N.Y. Aug. 21, 

1996), applied nine factors to determine whether the defendant was a government securities 

dealer, pursuant to Section 20(a) of the Securities Act, a different statute and section than at issue 

here. Finally, Chapel Invs., Inc. v. Cherubim Ints., Inc., 177 F. Supp. 3d 981, 990-91 (N.D. Tex. 

2016) is wholly inapposite at it applies to whether a defendant may freely sell shares into the 

market pursuant to “a court-approved Section 3(a)(10) exchange.” See 15 U.S.C. § 77c(a)(10) 

(Securities Act Section 3(a)(10), which exempts securities from registration if received in 

settlement of legal disputes after a fairness hearing). In making that finding the Court noted, 

“Under both the Securities Act and the Exchange Act, only a person engaged in the business of 

dealing may be considered a dealer.” Id. at 990 (citing Big Apple, 783 F.3d at 809 (investor 

relations company whose livelihood was based on reselling shares received from its clients as 

compensation for services provided in exchange for stock was a dealer)).

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Even if these factors were the controlling law, a cursory review of the record 

demonstrates that Defendant meets all four factors. See Def. MSJ at 14-15. This is fatal to 

Defendant’s self-analysis since, as this Court observed in its order denying Defendant’s motion 

to dismiss, “Indeed, the SEC Guide provides that a ‘yes’ answer to any one of the referenced 

factors ‘indicates that you may need to register as a dealer.’ Under that same reasoning, a ‘no’

answer to one or even all of the factors does not foreclose the possibility that someone is a 

‘dealer.’” DE 29 at 7.

First, Defendant claims that he “does not do business with the public or any investors.” 

Def. MSJ at 14. Yet he plainly solicits issuers—which are certainly part of the public—to sell 

him convertible notes; he does so through public means, including a website, Twitter, press 

releases, attending and sponsoring conferences, and employing commission-driven employees 

and paid third-party finders. DE 67 at ¶¶ 44-49, 51-62. In addition, once he converts the notes 

to shares, he sells those shares into the public market. 

Second, Defendant also asserts that he “does not quote prices for the purchase and sale of 

securities.” Def. MSJ at 14. But this is exactly what he does when he negotiates with issuers to

buy convertible notes or when he sells notes to other convertible note holders (as he did with one 

specific issuer, River North). See OSMF at ¶ 11. 

Third, Defendant further contends that he “does not stand ready or willing to buy and sell 

any particular security on a continuous basis or advertise that he is in the business of buying and 

selling securities.” Def. MSJ at 15. Defendant cannot dispute his extensive pubic advertising 

and active soliciting, through which he holds himself out as being ready and willing to purchase 

convertible notes (e.g. “QuickLoans”). Indeed, there is no other way to characterize his 

announcement, in press releases distributed over the internet and through speeches at 

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conferences, that he had $20 million “committed” to investing in microcap companies, which for 

Defendant meant buying convertible notes. See DE 67 at ¶¶ 54.a & b, 60. These public 

announcements clearly express his willingness to purchase a “particular security” (convertible 

notes) and to sell a “particular security” (the stock derived from them). 

Fourth, Defendant also asserts that he “does not issue, originate, or underwrite 

securities.” Def. MSJ at 15. The undisputed facts demonstrate this contention is false. 

Defendant purchases convertible notes, converts them to new shares of stock, and sells those 

shares into the public market. There can be little doubt that this practice constitutes the creation 

or origination of securities and the issuance of those securities into the market similar to an 

underwriter. See, e.g., SEC v. River North, 415 F. Supp. 3d 853, 858 (N.D. Ill. 2019) (finding it 

“particularly significant” that...like an underwriter, River North purchased stocks at a discounted 

price directly from numerous issuers...(instead of purchasing stocks already in the marketplace, 

like a trader)” and “turned a profit not from selling only after market prices increased (like a 

trader), but rather from quickly reselling at a marked-up price”) (citing Gordon Wesley Sodorff, 

Jr., 50 S.E.C. 1249, 1992 WL 224082, at *5 (Sep. 2, 1992) (“Unlike an investor or trader, 

Sodorff’s profits did not result from appreciation in the value of the securities, but rather from 

his markup over the price he paid.”)).

5. Defendant’s Remaining Contentions Regarding His Status As A

Dealer Lack Merit

In further support of his claim that the four factors contained in the SEC Guide are 

controlling law upon which the Court must rely, Defendant makes a series of additional 

arguments targeting the specific and most persuasive facts demonstrating that he is a dealer 

pursuant to the plain language of the dealer registration statute and Eleventh Circuit law. None 

of Defendant’s kitchen-sink arguments aid him. Def. MSJ at 17-18. Defendant contends that the 

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following facts are not relevant to the dealer analysis: (1) the volume of his transactions, id. at 

19-20; (2) his marketing efforts directed at issuers, id. at 20-21; (3) the features of his convertible 

notes, id. at 21-22; and (4) the newly issued shares that result from his conversions of notes. Id. 

at 22-23.

First, Defendant’s contention that the volume of his transactions is irrelevant to the 

dealer analysis is wrong. Def. MSJ at 19-20. The number of securities transactions executed 

and the profits generated are key indicators of whether someone is in the business of buying and 

selling securities. Where, as here, “a company’s business model is based entirely on the 

purchase and sale of securities, that fact constitutes conclusive proof that the company is a 

dealer.” See Almagarby 479 F. Supp. 3d at 1272 (finding that “the sheer volume of the number 

of deals and the large sums of profit Defendants generated—no fewer than 962

sales of shares and more than $2.8 million in proceeds—gives credence to the proposition that

Defendants were engaged in the ‘business’ of buying and selling securities”) (citing SEC v.

Ridenour, 913 F.2d 515, 517 (8th Cir. 1990) (defendant “was a dealer because his ‘high level of

activity ... made him more than an active investor’”)). Moreover, volume tends to establish the 

“regularity of participation in securities transactions” and as the Commission noted 29 years ago 

in an adjudicated proceeding (not in guidance), a dealer will have “more than a few isolated 

transactions.” See DE 29 at 8 (quoting Gordon Wesley Sodorff, Jr., 1992 WL 224082, at *4-5; 

River North, 415 F. Supp. 3d at 858 (courts construing the term dealer generally require a 

“certain regularity of participation in securities transactions”).

Second, Defendant is also wrong to contend that any advertising or solicitation he 

directed at microcap issuers is somehow not relevant to the analysis of whether he is a dealer. 

Def. MSJ at 20-21. While conceding that “[a]dvertising directed at soliciting customers from the 

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investing public could be indicative of dealer activity,” he claims that his advertising and 

solicitations aimed at issuers from whom he offered to buy convertible notes is somehow not 

relevant to the analysis. Id. at 20. He offers no support for this conclusion—just his own 

observation that to conclude otherwise would be “nonsensically overbroad.” See id. 

Of course, Defendant ignores the obvious fact that advertising and soliciting issuers 

demonstrates that he was in the business of buying convertible notes. Almagarby, 479 F. Supp. 

3d at 1272 (clear indication that defendants were operating as dealers where they “went so far as 

employing finders” to solicit issuers to sell convertible notes to enhance their pecuniary gain). 

Further, this Court has already held that it was indicative of dealer activity where he “operated a 

website advertising his business to issuers,” “hired employees to solicit issuers who were willing 

to sell convertible notes to him,” “sponsored conferences in which he and his employees 

solicited penny stock issuers in person,” and “made PowerPoint presentations at conferences 

representing that he had $20 million ‘committed’ to purchase convertible notes from issuers.” 

DE 29 at 9 (emphasis added). All that has changed since the Court wrote those words is that 

these facts are now undisputed.

Third, Defendant baldly claims that it is irrelevant to the dealer analysis that his notes are 

convertible into the issuer’s stock at a considerable discount to the prevailing market price. Def. 

MSJ at 21-22. Defendant is mistaken. He again cites not a scintilla of legal authority for his 

position, while asserting that “[n]o prior SEC guidance states that the existence of this discount 

could be relevant to the dealer analysis.” See id. at 22. Whether this is technically true, it is 

hardly determinative where a slew of cases have found the discounted shares feature to be 

significant. For instance, Sodorff is not SEC guidance; it is instead a decision on the appeal of a 

proceeding adjudicated by FINRA (then known as NASD). Id., 1992 WL 224082, at *1. There, 

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the Commission specifically held in 1992 that discounts were highly relevant to the dealer 

analysis. Id., 1992 WL 224082, at *5. This is, of course, in addition to the governing case law, 

such as Big Apple, which highlighted the importance of receiving steeply discounted stock to the 

dealer analysis.

6

 See Big Apple, 73 F.3d at 810.

Finally, Defendant is also misguided when he claims that selling newly issued shares into

the public market is not indicative of dealer activity and that doing so did not make him an 

underwriter. Def. MSJ at 22-23. He admits that “[c]onvertible notes are, by definition, a way for 

new stock to come into the market.” See id. at 22. Then he asserts that “[t]here is no SEC 

guidance or case law that suggests all convertible notes are thus indicative of dealer activity, or 

that the shares being newly issued is even relevant to the dealer analysis.” Id. Defendant is 

wrong, both SEC guidance and case law indicate that selling newly issued shares into the market 

is indicative of “dealer” activity. See Ridenour, 913 F.2d 515; Sodorff, 1992 WL 224082. In 

making these arguments, Defendant ignores the SEC’s statement in 2003 that a person who 

“participate[s] in the sale or distribution of new issues, such as by acting as an underwriter,” may 

be a dealer. See Definition of Terms in and Specific Exemptions for Banks, Savings 

Associations, and Savings Banks Under Sections 3(a)(4) and 3(a)(5) of the Securities Exchange 

Act of 1934, SEC Release No. 34-47364, 2003 WL 328058, at *4 (Feb. 13, 2003) (emphasis 

added). 

 6 See also Almagarby, 479 F. Supp. 3d at 1279 (granting summary judgment where 

defendant operated a business of buying aged corporate debt from creditors, negotiating with the

corporate debtors to obtain repayment in the form of deeply discounted stock, and selling the

newly issued stock into the public market) (emphasis added); River North, 415 F. Supp. 3d at 

858-59 (finding it “particularly significant” that...like an underwriter, River North purchased 

stocks at a discounted price directly from numerous issuers...(instead of purchasing stocks 

already in the marketplace, like a trader)” and “turned a profit not from selling only after market 

prices increased (like a trader), but rather from quickly reselling at a marked-up price”) (citation 

omitted). 

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Defendant further contends that he was not an underwriter because allegedly he complied 

with Rule 144 of the Securities Act of 1933 (“Securities Act”) and he misleadingly points to 

attorney opinion letters stating that “he was not acting as an underwriter.” See Def. MSJ at 15-

16; 22-23. Defendant’s alleged compliance with Rule 144 does not exempt him from the 

requirement to register as a dealer pursuant to Section 15(a)(1) of the Exchange Act. Rule 144 is 

a safe harbor that applies to the resale of unregistered securities under the Securities Act; it is not 

a safe harbor from registering as a dealer pursuant to the Exchange Act. Section 4(a)(1) of the 

Securities Act allows individuals, who possess unregistered securities and are not underwriters, 

to sell those securities without registering them with the Commission. However, if resellers 

comply with Rule 144, they may sell the securities without being deemed underwriters under 

Section 4(a)(1). But complying with Rule 144 does not allow a reseller to ignore the dealer 

registration statute. 

In summary, Defendant cannot escape dealer liability with his carefully cultivated and 

misleading legal analysis, his bald allegations that SEC guidance somehow supersedes the plain 

language of the Exchange Act, or by claiming that—despite applicable case law—any evidence 

that the SEC uses to establish that he was in the business of buying and selling securities is 

irrelevant. Defendant is a dealer and not a trader because he buys and sells securities for his own 

account as part of a regular business. As demonstrated above, even applying Defendant’s handpicked factors from the SEC Guide underscores, rather than undermines, that conclusion. 

B. Defendant’s Due Process Argument Fails As A Matter Of Law 

Defendant’s Due Process arguments are without merit because: (1) he fails to even 

contend—a requirement for establishing a constitutional statutory challenge—that the dealer 

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registration statute itself is vague, ambiguous, or lacks clarity;

7 and (2) his Due Process argument 

is based on the obvious fictions that the SEC believes the law is unclear and has “taken a 

litigation position that contradicts” SEC guidance.8 Def. MSJ at 24-25. 

This Court correctly observed in August 2020 that Defendant had “failed to point to any 

particular aspect of the Exchange Act that is ambiguous.” DE 29 at 11. More than a year later, 

he still does not directly or meaningfully contend that the Exchange Act’s definition of “dealer” 

is ambiguous. This failure is fatal to his alleged defense because “[t]o sustain such a challenge, 

the movant [must not only allege, but] ‘must prove that the enactment is vague.’” City of South 

Miami v. DeSantis, 408 F. Supp. 3d 1266, 1303 (S.D. Fla. 2019) (quoting Village of Hoffman 

Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 494 n.7 (1982)) (emphasis in original). 

Defendant, rather than accept that this case does not involve the SEC’s interpretation of a 

regulation, but is about the application of the plain language of the relevant statute, continues to 

focus on the Guide, and simply ignores that the law in the Eleventh Circuit is clear.9

 See Big 

 7 To the extent that Defendant contends he has articulated a statutory Due Process claim, 

he is incorrect. Defendant merely claims in conclusory fashion, “The SEC already conceded 

decades ago that ‘engaged in the business’ was not clear” and that the SEC’s supposed confusion 

“is a clear sign of a due process violation.” Def. MSJ at 24. This, of course, is not an allegation, 

much less an argument, that the statute itself lacks clarity. Defendant is undoubtedly aware that 

this argument is facially untenable, since Big Apple definitively interpreted that very language 

and applied a plain meaning analysis that utterly forecloses any such argument. Big Apple, 783 

F.3d at 790 (interpreting “engaged in the business” to mean, operating “[a] commercial 

enterprise carried on for profit, a particular occupation or employment habitually engaged in for 

livelihood or gain.”). 

8 The Commission asks that its MSJ arguments relating to Due Process be incorporated 

fully herein. See DE 68 at 22-24.

9 As this Court aptly stated in its August 2020 order denying his Due Process argument at 

the pleadings stage, Defendant “overlooks the express language of the Exchange Act, decisions 

from this circuit applying the definition of ‘dealer,’ and the SEC Guide itself, which sets forth 

instances in which a party can be deemed a dealer.” See DE 29 at 10-11.

Case 1:20-cv-21254-BB Document 89 Entered on FLSD Docket 08/31/2021 Page 27 of 35
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Apple, 783 F.3d at 809 (applying the plain language of the statute and finding defendant was a 

dealer); Eastside Church., 391 F.2d at 362 (same); Almagarby, 479 F. Supp. 3d at 1268 (same). 

Second, because Defendant cannot seriously challenge the language of the statute or cite even 

one case holding that the language is vague or ambiguous, he claims that the statute must be 

unclear because the SEC issued the Guide and because the SEC’s website “states that whether 

certain facts and circumstances meet the dealer definition is ‘less clear.” He further falsely 

asserts that the SEC’s position in this case “contradicts” prior SEC guidance. See Def. MSJ at 

24-25 (emphasis in original); DE 29 at 11. These claims fail to meet his burden.

As an initial matter, Defendant’s argument that SEC guidance somehow renders the 

dealer registration statute ambiguous where, as here, courts have found the language to be clear, 

is nonsensical. See Wyndham, 799 F.3d at 251 (“The court not the agency is the ultimate arbiter 

of the statute’s meaning”). In addition, whether it is “less clear” if some unidentified, 

hypothetical set of facts and circumstances meet the dealer definition, is not a serious 

argument—and does not mean that the dealer registration statute or the Eleventh Circuit law 

interpreting it is not clear. 

Defendant further contends that no SEC dealer guidance specifically mentions 

convertible notes or the discounts in them, Def. MSJ at 24, but fails to acknowledge that this is 

of no moment. See Wyndham, 799 F.3d at 255 (holding that a person “is only entitled to notice 

of the meaning of the statute and not to the agency’s interpretation of the statute”). Defendant 

also claims that he must not be a dealer because “prior [SEC] guidance [states] that ‘individuals 

who buy and sell securities for themselves generally are considered traders and not dealers.’” 

Def. MSJ at 24-25. Defendant must selectively quote the Guide—excising out of his quote the 

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critical phrase “engages in the business of buying and selling securities,” which unambiguously 

applies to Defendant’s conduct and is emphasized in the controlling precedent. 

Defendant insists that because the Guide does not mention convertible notes, the SEC 

somehow changed its interpretation of the statute through this enforcement action. As discussed 

in the SEC’s MSJ, even if it had not previously brought an enforcement action under a similar 

theory (which, of course, it already has), it is not estopped from charging Defendant for his 

violations.10 “[I]t is well settled that the Government may not be estopped on the same terms as 

any other litigant.” Heckler v. Community Health Servs., Inc., 467 U.S. 51, 60 (1984). Indeed, 

the affirmative defenses of estoppel and waiver should only be applied against the government 

“in the most serious of circumstances” “upon a showing of affirmative misconduct by the 

government.” Rojas–Reyes v. INS, 235 F.3d 115, 126 (2d Cir. 2000) (internal quotation marks 

omitted). Defendant has not even attempted to make such a showing here. 11

Finally, Defendant also alleges that his conduct was “consistent with industry practice, 

which further underscores that the SEC’s current litigation position constitutes a due process 

violation.” Def. MSJ at 25. But he does not even identify the “industry” in which he operates:

 10 See also Section 26 of the Exchange Act [15 U.S.C. § 78z] (“No action or failure to act 

by the Commission....shall be construed to mean that the particular authority has in any way 

passed upon the merits of or given approval to any security or any transaction....”).

11 Rather, Defendant attempts to rely upon a collection of inapposite cases in which 

agencies ignored their own regulations or policies and do not address enforcement of a federal 

statute. Def. MSJ at 24-25; see, e.g., FCC v. Fox Television Stations, Inc., 567 U.S. 239, 253 

(2012) (finding a due process violation when the agency abruptly changed its formal policy on 

indecency); PHH Corp. v. CFPB, 839 F.3d 1, 42 (D.C. Cir. 2016) (abrogated by Seila Law LLC 

v. Consumer Financial Protection Bureau, 140 S. Ct. 2183 (2020)) (“the CFPB has not adhered 

to [its] regulation”); Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 157 (2012) 

(refusing to defer to the Department of Labor’s retroactive application of a changed 

interpretation of its own regulations); Upton v. SEC, 75 F.3d 92, 93, 98 (2d Cir. 1996) (focused 

on agency interpretation of regulation).

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the business of buying convertible notes, converting them to newly issued shares of stock, and 

selling those shares into the public market. Rather, Defendant attempts to liken himself to hedge 

funds, family offices, angel investors, and high frequency traders. His argument is without merit 

because the Commission is not obligated to sue any other party before suing a Defendant even 

under the same theory. But more fundamentally, Defendant presents no persuasive evidence that 

these other entities operated a convertible note business in the same manner as he did. 

As if the plain language of the statute and the Eleventh Circuit law interpreting it were 

not enough, even after the SEC sued Defendant for not registering as a dealer while operating an 

expansive and highly lucrative convertible note business, and while his motion to dismiss was 

pending with the Court, he sold $13.76 million shares of stock converted from a note issued to 

him by Blink Charging Co. DE 67 at ¶ 36. And that was after telling SEC staff that “I have no 

interest in reentering that [convertible note] business whatsoever again.” Id. at ¶ 35. There is

arguably no greater notice that one is violating the dealer registration statute than being sued 

under Exchange Act Section 15(a)(1), and yet Defendant continued to reap millions of dollars 

from his convertible notes business. 

C. Defendant’s Disgorgement Arguments Are Both Premature And Without Merit

Defendant challenges the SEC’s ability to seek disgorgement in this case on three 

grounds: “(1) there are no victims of Mr. Keener’s investments [pursuant to Liu v. SEC, 140 S. 

Ct. 1936 (2020)]; (2) there is no causal connection between the alleged registration violation and 

any ill-gotten gains; and (3) Mr. Keener lost money on the transactions at issue.” Def. MSJ at 

25-26. These claims are premature and should be addressed after a decision on liability has been 

issued by the Court. 

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First, Defendant has now conceded that it is premature during the liability phase of the 

case for the Court to rule on disgorgement or any equitable remedies, including injunctive relief. 

DE 87 at 8. 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 a final judgment 

and the imposition of remedies.12 Thus, the Court should dispense with addressing the remedies 

issues now. 

Second, Defendant’s three arguments are simply wrong. His contention that the SEC 

must identify individual victims has no basis in law. The Supreme Court in Liu did not require 

the SEC to undertake the significant burden of identifying individual harmed investors or 

quantifying their losses before disgorgement is awarded or collected. “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. Contrary to Defendant’s first contention, 

there is no new requirement under Liu that the SEC identify any victims, let alone at this stage of 

the proceedings. SEC v. Almagarby, Case No. 17-62255-CIV-COOKE/HUNT, slip op. at 7 

(S.D. Fla. Aug. 16, 2021) [DE 138] (“[T]he Supreme Court made no ruling, as Defendants 

suggest, that the SEC must identify specific victims to whom a disgorgement award should be 

 12 See SEC v. Ginsburg, No. 99-8694-CV-RYSKAMP, 2002 WL 1835810, at *1 (S.D. Fla. July 8, 

2002) (citing 15 U.S.C. § 78u-1); see also Brice v. Haynes Invest., LLC, 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.”).

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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).

Apart from being premature, Defendant’s second claim—that the SEC cannot 

demonstrate a causal link between disgorgement and his dealer registration violation—is also 

wrong. The SEC seeks disgorgement of all profits Defendant obtained as a result of his 

commercial enterprise in which he purchased convertible notes, converted those notes to stock, 

and sold the stock into the public market. This practice is the basis for the SEC’s unregistered 

dealer claim and, therefore, is linked to the disgorgement calculation. 

Finally, Defendant’s contention that the “SEC has not demonstrated that Mr. Keener 

generated any net profits” is also premature and wrong as a matter of undisputed fact. Def. MSJ 

at 28. The notion that Defendant lost money on his convertible notes business is simply fanciful. 

He spent almost $52 million buying convertible notes between July 2010 and April 2018. DE 

67-11 at Ex. 4. And the record evidence demonstrates unambiguously that Defendant’s 

convertible notes business was exceptionally profitable. Defendant’s assertion that he lost 

money is based upon the fallacy created by his hired expert, who excluded a large portion of

Defendant’s income from convertible notes by counting only proceeds from selling stock 

converted from notes. Defendant’s expert then, plainly misleadingly, applied an offset for every 

conceivable business expense Defendant experienced during the same period. See Taveras 

Expert Report at ¶ 13. In taking 100 percent of the losses for JMJ Financial, the expert did not 

count proceeds from selling stock that Defendant received to settle outstanding convertible note 

debts, nor did he count proceeds from selling stock from warrants that were bundled with 

Case 1:20-cv-21254-BB Document 89 Entered on FLSD Docket 08/31/2021 Page 32 of 35
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convertible notes. Id. at ¶ 12. The Court should not rely on this obviously selective and 

misleading accounting in deciding any future disgorgement award.

D. Defendant’s Challenge to Injunctive Relief Is Premature And Meritless

Defendant asks the Court to summarily reject the SEC’s request for injunctive relief 

because the SEC purportedly could not meet the required elements. See Def. MSJ at 29-30. He 

asserts that: (1) no one was harmed by his conduct and thus there is “no risk of future harm”; (2) 

he did not act with scienter; and (3) he “stopped investing in new convertible notes in microcap 

companies four years ago.” Id. Defendant now concedes that injunctive relief is appropriately 

determined only after a finding on liability. DE 87 at 8. Thus, the Court should dispense with 

this issue until after liability has been determined. 

Nonetheless, the SEC has met the elements to obtain an injunction. The standard in the

Eleventh Circuit for injunctive relief in an SEC enforcement action focuses on the likelihood that 

the perpetrator will repeat the violations in the future: “[t]he SEC is entitled to injunctive relief 

when it establishes (1) a prima facie case of previous violations of federal securities laws, and (2) 

a reasonable likelihood that the wrong will be repeated.” See SEC v. Calvo, 378 F.3d 1211, 1216 

(11th Cir. 2004). The SEC has demonstrated that Defendant has violated the unregistered dealer 

statute and is likely to repeat the violation as his convertible notes business was prolific and 

highly lucrative and he continued it during the pendency of this case. 

CONCLUSION

The Court should deny Defendant’s MSJ because he meets the definition of dealer in 

the Exchange Act and did not register with the SEC as required by Section 15(a)(1). 

Case 1:20-cv-21254-BB Document 89 Entered on FLSD Docket 08/31/2021 Page 33 of 35
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DATE: August 31, 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

ATTORNEYS FOR PLAINTIFF 

SECURITIES AND EXCHANGE 

COMMISSION 

Case 1:20-cv-21254-BB Document 89 Entered on FLSD Docket 08/31/2021 Page 34 of 35
29

 

CERTIFICATE OF SERVICE

 

I hereby certify that on August 31, 2021, I filed Plaintiff Securities And Exchange 

Commission’s Opposition to Defendant’s Motion for Summary Judgment 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

Case 1:20-cv-21254-BB Document 89 Entered on FLSD Docket 08/31/2021 Page 35 of 35