SEC bars Florida manager over $2.5M merchant cash advance scheme

Unregistered merchant cash advance sales landed a Florida manager a three-year SEC bar after raising $2.5 million from 240 investors.

Let's walk through what actually happened, in plain language, and why it matters in the advice and brokerage world.

Ruiz was a manager and lead sales agent for MJ Capital Funding, LLC. He functioned as a broker, even though he was not registered with the Commission and was not associated with a registered broker-dealer.

The SEC filed a civil action in the U.S. District Court for the Southern District of Florida, focusing on a specific period and a specific product. According to the Commission, from at least July 2020 through August 2021, Ruiz personally, and through a team of at least 11 sales agents, solicited investors across the country.

The SEC alleged that Ruiz and his team raised at least $2.5 million from about 240 investors nationwide. The money came in through sales of securities issued by MJ Capital in unregistered transactions. Those securities took the form of "Merchant Cash Advance Agreements."

Investors were told their money would be used to make small business loans called merchant cash advances. In exchange, they would receive returns of 10% per month, along with a return of their principal investment when the agreements reached maturity. The SEC also alleged that Ruiz helped his sales agents with their pitches to investors and provided them with MJ Capital's offering materials. In return for his work, he received transaction-based compensation in the form of commissions from MJ Capital, tied to the sales of those securities.

The civil case moved quickly to a final judgment. On January 20, 2026, a judgment was entered by consent against Ruiz in that federal action. The court permanently enjoined him from future violations of Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 15(a)(1) of the Securities Exchange Act of 1934. In everyday terms, he is under a permanent court order not to break those particular registration rules again.

That court outcome set up the administrative step that directly affects his ability to work in the industry. In anticipation of an administrative proceeding, Ruiz submitted an offer of settlement to the SEC. Without admitting or denying the findings in the administrative order – except for the SEC's jurisdiction and the existence of the federal court judgment – he agreed to the sanctions the Commission ultimately imposed.

On January 26, 2026, the SEC issued its administrative order under Section 15(b)(6) of the Exchange Act. In that order, the Commission barred Ruiz from associating with any broker, dealer, investment advisor, municipal securities dealer, municipal advisor, transfer agent or nationally recognized statistical rating organization. It also barred him from taking part in any offering of a penny stock, including acting as a promoter, finder, consultant, agent or any other person involved in activities with a broker, dealer or issuer for the issuance or trading of any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock. Both bars carry a right to apply for reentry after three years.

The order makes clear that coming back is not automatic. Any application for reentry has to be made to the appropriate self-regulatory organization, or to the SEC if there is none, by contacting the Division of Enforcement's Office of Chief Counsel. Reentry can be conditioned on compliance with the Commission's order and payment of any disgorgement or civil penalties ordered by a court against Ruiz in any action brought by the Commission, any arbitration award related to the conduct that led to the order, any self-regulatory organization arbitration award to a customer, and any restitution order by a self-regulatory organization.

For advisors and anyone working in wealth management or alternative investments, this case is a clear signal about how the SEC views merchant cash advance products when they are packaged and sold as securities. The line between a business financing product and an investment security can be thin, and crossing it without proper registration brings serious consequences.

When a product promises investors monthly returns and treats their money as pooled capital rather than direct lending, it starts to look like a security in the eyes of regulators. And when someone solicits those investments, supervises a sales team and earns commissions on the sales, that person is functioning as a broker, whether or not they hold themselves out as one.

The practical takeaway is simple. If you encounter merchant cash advance products being marketed to investors with guaranteed monthly yields, ask hard questions. Who is selling it? Are they registered? How are they compensated? Is this truly a business loan or is it an investment contract? The answers matter, and getting them wrong can end a career in this industry.