The Securities and Exchange Commission today charged Jared Eakes, who is believed to reside in Jacksonville, Florida, with misappropriating over $2 million from his clients at GraySail Advisors, LLC ("GraySail"), a now defunct Florida-based investment adviser created and controlled by Eakes. The SEC also charged James Blake Daughtry of Dothan, Alabama, for breaching his fiduciary duties to his clients when selling his advisory business to Eakes and moving his clients' accounts to GraySail.

According to the SEC's complaint, Eakes formed GraySail in 2018 to purchase Daughtry's Dothan, Alabama-based advisory business and to acquire additional clients from an Arkansas-based broker-dealer. Those acquisitions gave GraySail approximately 47 clients and $8.6 million in assets under management. The complaint states that Eakes misappropriated approximately $2.6 million from those clients and used the proceeds to, among other things, engage in unprofitable trading in his personal brokerage accounts, pay off business and personal loans, including his own student loans, and pay $116,000 to a Las Vegas casino. The complaint also alleges that, although Daughtry was unaware of Eakes' fraud, he breached the fiduciary duties he owed to his clients by failing to disclose that he had sold all of his client accounts to GraySail in exchange for substantial compensation, and by failing to act in his clients' best interests when he was presented with client complaints and other red flags regarding Eakes' conduct.

The SEC's complaint, filed in the Middle District of Florida, charges Eakes with violating the antifraud provisions of Sections 17(a)(1) and (3) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 ("Advisers Act"), and charges Daughtry with violating Section 206(2) of the Advisers Act. The SEC seeks injunctive relief, disgorgement, and civil penalties against both defendants.

In parallel actions, the Alabama Securities Commission today announced the filing of Orders to Bar against Eakes and Daughtry.

The SEC's investigation was conducted by William Dixon and supervised by Thomas B. Bosch, both of the SEC's Atlanta Regional Office. The SEC's litigation will be led by Paul Kim and supervised by M. Graham Loomis. The SEC appreciates the cooperation of the Alabama Securities Commission.