Appeals Court Upholds Lender’s Stock ‘Dealer’ Tag in Win for SEC

A man who bought and sold billions of newly issued penny stock shares acted as an unregistered securities dealer, a federal appeals court ruled.

The ruling is the latest win for the Securities and Exchange Commission in its crackdown on so-called toxic lenders. The agency has used a relatively novel legal theory, arguing the lenders illegally acted as unregistered dealers.

Justin Keener’s business, which made profits from converting microcap debt into stock at a discount and selling the shares in high volumes, met federal securities law’s definition of a dealer, the US Court of Appeals for the Eleventh Circuit said ...