James Blake Daughtry Permanently Barred by SEC After Alleged Fiduciary Breaches Tied to GraySail Advisors

Who Is James Blake Daughtry?

James Blake Daughtry (CRD# 3272282) was an Alabama-based investment adviser and broker with over 20 years in the securities industry across seven firms, primarily out of Dothan, Alabama. His most recent registered firm was Kestra Investment Services, LLC (CRD# 42046), where he was registered from February 2015 until he was discharged in March 2020.

What the SEC Alleged Against Daughtry

The SEC’s Litigation Release No. 26557, published May 21, 2026, describes the final consent judgment entered by the U.S. District Court for the Middle District of Alabama (Case No. 1:24-cv-00125). The original complaint against both Daughtry and Jared D. Eakes was filed September 28, 2022 in the Middle District of Florida before the Daughtry claims were severed and transferred to Alabama.

According to the SEC’s complaint and BrokerCheck disclosures, Daughtry allegedly:

• Failed to disclose compensation: He did not tell clients that Eakes was paying him to sell his advisory business and move client accounts to GraySail.
• Failed to monitor accounts: After the sale, Daughtry was expected to continue reviewing transactions before they were executed, but allegedly stopped without informing clients.
• Made promises he did not keep: Clients he recruited directly to GraySail were told he would monitor their accounts and review proposed investments, but he allegedly failed to do so even when clients raised specific questions.
• Enabled the alleged fraud: Eakes allegedly misappropriated the $2.6 million by causing clients to purchase fake promissory notes from Small World Capital, LLC, an entity he had no authority to act on behalf of. Daughtry’s failure to exercise care for his clients allegedly allowed this to occur.

Without admitting or denying the allegations, Daughtry consented to a permanent injunction barring future violations of Section 206(2) of the Investment Advisers Act of 1940, a permanent bar from associating with any broker, dealer, or investment adviser, and a $50,000 civil penalty. The SEC’s litigation against Eakes remains pending in the Middle District of Florida. The case was led by Paul Kim and H.B. Roback of the SEC’s Atlanta Regional Office, under the supervision of M. Graham Loomis.

A Pattern of Regulatory Action and Customer Disputes

Daughtry’s BrokerCheck record reveals that the SEC consent judgment was not the first regulatory or legal action taken in connection with his conduct. His record includes 9 total disclosures spanning regulatory actions, customer disputes, and an employment termination.

FINRA bar (March 2020): Before the SEC’s complaint was even filed, FINRA permanently barred Daughtry on March 18, 2020, after he refused to appear for on-the-record testimony in connection with a FINRA investigation into potentially fraudulent and unauthorized transactions in customer accounts. He was simultaneously discharged by Kestra Investment Services.

Alabama Securities Commission bar (September 2022): The Alabama Securities Commission issued a permanent bar against Daughtry, citing his failure to make full and complete disclosure to clients that their accounts were being sold and moved to GraySail, and his lack of involvement with those accounts.

Customer disputes: BrokerCheck reflects multiple customer disputes, all related to Daughtry allegedly soliciting clients to open accounts with a third-party registered investment adviser the SEC found to have engaged in fraud. Notable settlements include:

• A July 2020 settlement of $2,000,000 on alleged losses of approximately $1.5 million
• A June 2021 settlement of $65,000
• An April 2021 settlement of $20,000 on a claim seeking over $200,000
• A June 2020 settlement of $29,900 on allegations of unauthorized transactions, misrepresentations, negligence, and breach of fiduciary duties
• A pending dispute as of August 2020 seeking approximately $231,752

How the Transfer to GraySail Advisors Allegedly Left Investors Exposed

The GraySail Advisors case illustrates a scenario that can leave investors particularly vulnerable: the transition of an advisory relationship from a trusted professional to an unknown successor firm.

According to the SEC and BrokerCheck disclosures, Daughtry moved or recruited clients to GraySail and in some cases assured them he would remain involved in monitoring their accounts. Eakes allegedly used that trust to steer clients into fake promissory notes from Small World Capital, LLC. When clients raised questions about investments at GraySail, Daughtry allegedly failed to investigate or intervene, creating the conditions for the alleged $2.6 million misappropriation.

What Recovery Options May Be Available for Affected Investor

The SEC’s enforcement action addresses regulatory consequences. It does not directly compensate individual investors. Investors who were moved from Daughtry’s practice to GraySail may have independent legal claims, including:

• Breach of fiduciary duty: Investment advisers owe clients both a duty of care and a duty of loyalty. The SEC’s allegations and BrokerCheck disclosures describe failures under both, including undisclosed compensation and a failure to monitor.
• Civil litigation: Civil claims in state or federal court may be viable depending on each investor’s specific circumstances and the parties involved.
• Failure to supervise: If any supervising entity failed to adequately oversee Daughtry’s conduct, including his registered firm at the time, those firms may bear independent liability.

Statutes of limitations apply to investment fraud and fiduciary breach claims. Investors who believe they were harmed should consult a securities attorney promptly.

How Meyer Wilson Werning Can Help

The clients allegedly harmed in the GraySail Advisors matter trusted their adviser, asked the right questions, and still suffered losses. That is exactly the kind of case Meyer Wilson Werning was built to pursue.

With more than $350 million recovered for investors nationwide, Meyer Wilson Werning has spent over 25 years holding advisers and firms accountable for fiduciary failures and the harm that follows when a trusted professional stops acting in a client’s best interest. If you suffered losses after being moved from James Blake Daughtry’s practice to GraySail Advisors, contact us today for a free and confidential consultation. You pay nothing unless we recover for you.

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