James Daughtry Named in $2.6 Million Regulatory Action
James Daughtry (CRD #: 3272282), a broker formerly registered with Kestra Investment Services, is named in an SEC civil suit and pending state-level action, according to his BrokerCheck record, accessed on October 30, 2022. Read on if you have questions about his conduct as a broker.
Regulatory Action by State of Alabama
On September 29, 2022, the Alabama Securities Commission issued an Order to Bar James Daughtry in response to his alleged failure to provide full and complete disclosure that clients’ accounts were being sold and moved to GraySail Advisers, and that James Daughtry had a lack of involvement with their accounts.
This order is currently pending.
SEC Civil Suit
On September 28, 2022, the Securities and Exchange Commission filed a civil suit against James Daughtry and Jared Eakes. The SEC alleges that Jared Eakes misappropriated over $2.6 million from clients of GraySail Advisers, an investment adviser firm he owned and controlled, from at least January 2019 through December 2019.
Jared Eakes allegedly caused clients to purchase fake promissory notes purportedly issued by Small World Capital, LLC. The SEC alleges that the notes were not issued by Small World Capital, as Jared Eakes did not have the authority to act on that company’s behalf.
James Daughtry’s Alleged Involvement
According to the SEC, several of these defrauded clients were allegedly clients of James Daughtry before moving to GraySail Advisors. James Daughtry allegedly failed to inform these clients that Jared Eakes was paying him for selling his advisory and brokerage business and moving his clients to GraySail Advisors.
The clients allegedly believed that, following the movement of their accounts to GraySail Advisors, James Daughtry would continue reviewing transactions in each client’s account with them before Jared Eakes would execute the transactions. The SEC alleges that James Daughtry did not follow through on this and did not inform these clients that he had ceased reviewing transactions.
The SEC alleges that James Daughtry failed to exercise the requisite care for his clients and enabled Jared Eakes to defraud them, in violation of Section 206(2) of the Investment Advisers Act of 1940.
This suit is currently pending.
The Investment Advisers Act of 1940
Section 206(2) of the Investment Advisers Act of 1940 prohibits the use of fraudulent and deceptive business practices and transactions.
On June 16, 2021, an investor alleged that James Daughtry caused them to experience losses by soliciting them to open an account with a third-party registered investment advisor who the SEC found to have been engaging in fraud. This dispute was settled for $65,000.
Two pending disputes, filed on August 14 and July 23, 2020, made similar allegations. These disputes seek $1,731,752 in damages.
from Termination from Kestra Investment Services
On March 18, 2020, James Daughtry was fired from Kestra Investment Services following his bar by FINRA.
Bar by FINRA
On March 18, 2020, James Daughtry consented to the entry of findings that he refused to appear for on-the-record testimony requested by FINRA in connection with an investigation into potentially fraudulent and unauthorized transactions in clients’ accounts.
According to a Letter of Acceptance, Waiver & Consent (AWC), this alleged refusal violated FINRA Rules 8210 and 2010.
FINRA Rules 8210 and 2010
FINRA Rule 8210 requires brokers to provide testimony and books for inspection by FINRA request.
FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.
James Daughtry was permanently barred by FINRA on March 18, 2020.
You can read a copy of the AWC here.
James Daughtry has passed the following exams:
- Series 65 – Uniform Investment Adviser Law Examination
- Series 63 – Uniform Securities Agent State Law Examination
- SIE – Securities Industry Essentials Examination
- Series 7 – General Securities Representative Examination
In the past, he worked for the following firms:
- Kestra Investment Services (CRD#:42046)
- Ameriprise Financial Services (CRD#:6363)
- Securities America (CRD#:10205)
- Sterne Agee Financial Services (CRD#:18456)
- Wachovia Securities (CRD#:19616)
- Southtrust Securities (CRD#:17922)
- Liberty Securities (CRD#:14416)
Kurta Law Can Help
If you worked with James Daughtry and you have concerns about your investments, please contact us today at 877-600-0098 or firstname.lastname@example.org for a free consultation.
For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.