Court Rules Defendant Violated Securities Exchange Act

Defendant ordered to pay $150,000 in principal and $18,000 in late fees for breaching promissory note

Feb. 4, 2026 at 2:07pm

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A federal court in Norfolk, Virginia has ruled that the defendant, Eric Miller, violated the Securities Exchange Act of 1934 by selling securities to the plaintiff, Earl Johnson, without being a registered broker. The court also found that Miller breached a promissory note by failing to make any of the required $12,500 monthly payments to Johnson, ordering Miller to pay the full $150,000 principal amount plus $18,000 in late fees.

Why it matters

This case highlights the importance of securities regulations and the need for brokers to be properly registered with the SEC and FINRA. It also demonstrates the legal consequences that can arise from breaching a promissory note agreement, including the potential for significant financial penalties.

The details

The court found that Miller, who was not registered as a broker, induced Johnson to invest $100,000 in Miller's day trading algorithm model, with the promise of receiving 50% of Johnson's trading returns as commission. However, Miller lost Johnson's money in the market, despite assuring him the returns would exceed 200%. The court ruled that Miller's actions constituted him acting as an unregistered broker, in violation of the Securities Exchange Act. Additionally, the court found that Miller breached a $150,000 promissory note by failing to make any of the required $12,500 monthly payments to Johnson, ordering Miller to pay the full principal amount plus $18,000 in late fees.

  • In July 2021, Miller induced Johnson to invest $100,000 in his day trading algorithm model.
  • On August 21, 2024, Miller executed a $150,000 promissory note with Johnson, requiring $12,500 monthly payments starting October 1, 2024.
  • Miller has not made a single payment on the promissory note.

The players

Earl Johnson

The plaintiff who invested $100,000 with the defendant and is owed $150,000 under a promissory note.

Eric Miller

The defendant who induced the plaintiff to invest in his day trading algorithm model without being a registered broker, and who failed to make any payments on a $150,000 promissory note.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee

What’s next

The court has directed the plaintiff to submit supplemental briefing with evidence regarding attorney's fees by February 4, 2025, and the defendant may respond by February 18, 2025. The court will then hold a hearing if additional information is needed or issue an order fixing the amount of fees due and entering final judgment.

The takeaway

This case highlights the importance of securities regulations and the legal consequences that can arise from breaching a promissory note agreement. It serves as a warning to individuals who may attempt to circumvent broker registration requirements or fail to fulfill their financial obligations, as they can face significant penalties and legal action.