There are options for clients of former Kestra Investment Services, LLC broker James Daughtry (CRD# 3272282) who suffered investment losses. He was registered with Kestra Investment Services, LLC in Dothan, Alabama, from 2015 to 2020, when he was terminated regarding, “Daughtry violated FINRA Rules 8210 and 2010 and was bar from associating with any FINRA member firm in any capacity.”
In March 2020, FINRA barred him after he “consented to the sanction and 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 customers’ accounts.”
In September 2022, the Alabama Securities Commission barred him permanently following allegations that he “failed to make full & complete disclosure that clients’ accounts were being sold, moved to GraySail & lack of respondent’s involvement with their accounts.”
In September 2022, the Securities and Exchange Commission (SEC) alleged that between at least January 2019 and December 2019, Jared Eakes “misappropriated over $2.6 million from clients of GraySail Advisers, LLC, an investment advisor firm that Eakes owned and controlled. Eakes did so primarily by causing these clients to purchase fake promissory notes purportedly issued by a company called Small World Capital, LLC. In truth, the notes were not issued by Small World Capital, as Eakes had no authority to act on behalf of that entity.” The SEC found that several of the defrauded clients had previously been advisory clients of James Daughtry prior to joining GraySail. The SEC alleged that “Daughtry failed to tell these clients that Eakes was paying him for selling his advisory and brokerage business and moving his clients to GraySail. For these clients, after the sale to GraySail was complete, Daughtry expected to continue his existing practice of reviewing transactions in the client’s account with the client before those transactions were executed by Eakes. In fact, Daughtry did not do this, but never told these clients that he had stopped reviewing transactions with them. Daughtry also recruited new clients to GraySail following the sale of his advisory business to Eakes. He told these clients that he would monitor their accounts, and review any proposed investments with GraySail before such investments were consummated. Daughtry failed to abide by these promises, even when several clients raised questions about certain investments that had been made in their accounts with GraySail. Daughtry’s failure to exercise the requisite care for his clients, once their accounts were at GraySail, enabled Eakes to defraud these clients.”
In 2025, James Daughtry pled guilty to wire and bank fraud charges.
In May 2026, the U.S. District Court for the Middle District of Alabama entered a final consent judgment against the broker, permanently barring him from the financial services industry. He was ordered to pay a $50,000 civil penalty. The federal court held him liable for breaching his fiduciary duties to clients when he sold his advisory book of business to GraySail Advisors, a newly formed LLC by Jared Eakes.
According to the SEC, following the sale of his book of business, he misappropriated $2.6 million from clients who moved to the acquiring firm through the sale of fictitious promissory notes allegedly issued by a company called Small World Capital. The broker moved 33 clients and recruited seven new clients to GraySail, as well as $7.8 million in assets under management. As part of the deal, the broker was set to receive $1 million across three years, as well as $100,000 to be used for personal vehicles, a monthly stipend for life, and stock options with a value of $1.5 million. Regrettably for the broker, he did not conduct adequate due diligence, trusting the firm managed $100 million in assets, when in reality reports indicated that they had one client and just $10 in assets under management.
The SEC’s complaint alleged that the broker told his existing and new clients that he would remain involved in the management of their accounts and investment decisions; in reality, he did not inform clients when he stopped reviewing transactions, and he did not inform them that he received compensation for transferring their accounts.
James Daughtry Customer Complaints
He has been the subject of two customer complaints in 2020, according to his CRD report:
June 2021. “Plaintiff alleged losses in connection with Daughtry allegedly soliciting clients to open account with a third party registered investment advisor who the SEC found to have been engaged in fraud.” The case was settled for $65,000.
April 2021. “Plaintiff alleged losses in excess of $200,000 in connection with Daughtry allegedly soliciting clients to open account with a third party registered investment advisor who the SEC found to have been engaged in fraud.” The customer sought $200,000 in damages, and the case was settled for $20,000.
August 2020. “Plaintiff alleged losses of approximately $231,752 in connection with Daughtry allegedly soliciting clients to open account with a third party registered investment advisor who the SEC found to have been engaged in fraud.” The customer is seeking $231,752 in damages.
July 2020. “Plaintiffs allege losses of approximately $1.5 million in connection with Daughtry allegedly soliciting clients to open account with a third party registered investment advisor who the SEC found to have been engaged in fraud.” The customer sought $1,500,000 in damages, and the case was settled for $2 million.
June 2020. “Client alleges unauthorized transactions, misrepresentations, negligence and breach of fiduciary duties.” The customer sought $65,000 in damages, and the case was settled for $29,900.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Kestra Investment Services, LLC may be liable for investment or other losses suffered by James Daughtry’s customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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