SEC v. Gregory David Paris; and Barrington Asset Management, Inc., Northern District of Illinois (Feb. 10, 2026) — Complaint

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UNITED STATES SECURITIES
AND EXCHANGE COMMISSION,

                         Plaintiff,

)
)
)
)
)

                                       v. )   No. 21-cv-3450
 )
GREGORY DAVID PARIS and
BARRINGTON ASSET MANAGEMENT,
INC.

                         Defendants.

)
)
)
)
)

  JURY DEMANDED

 )
_______________________________________ )

COMPLAINT

  Plaintiff United States Securities and Exchange Commission (“SEC”)

alleges:

1. This case involves a fraudulent cherry-picking scheme carried out

by Defendants Gregory David Paris (“Paris”) and Barrington Asset

Management, Inc. (“BAM”) (together, Paris and BAM are the “Defendants”).

BAM is an investment adviser registered in Illinois and Georgia. Paris is

BAM’s vice-president and chief compliance officer. From at least December

2015 through October 2019 (“Relevant Period”), Paris secretly enriched himself

at the expense of Defendants’ clients. All told, Paris received more than

$630,000 in ill-gotten gains from his deceptive scheme.

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2. “Cherry-picking” is when an investment adviser defrauds his

clients by purchasing stock and then waiting to see whether the price of the

stock goes up, or down, before allocating the trade. If the stock goes up, he

keeps the trade for himself. If the stock goes down, he puts the trades into client

accounts. He “cherry-picks” the profitable trades for himself and gives the

unprofitable ones to his clients. Oftentimes Paris closed out a profitable position

before he allocated the trade for himself – giving himself locked-in, guaranteed

profits.

3. Through this cherry-picking scheme, Paris misappropriated profits

that should have gone to Defendants’ clients, and avoided losses that Paris

should have borne himself.

4. Defendants also misrepresented how they were trading securities

for their clients. In documents BAM sent to its clients, which Paris reviewed

and approved, Defendants represented that the trades made on the clients’

behalf were being fairly allocated among the client accounts. The firm also

represented that “no person employed by the firm shall prefer his or her own

interest to that of an advisory client” and that the firm reviewed employees’

personal trading activity. These claims were false, as Paris was cherry-picking

trades, and no one was reviewing his personal trading activity.

5. Through this misconduct, Defendants violated various antifraud

statues and Commission rules, including Sections 17(a)(1), 17(a)(2) and 17(a)(3)

of the Securities Act of 1933 (“Securities Act”); Section 10(b) of the Securities

 3

Exchange Act (“Exchange Act”) and Ruled 10b-5(a), 10b-5(b) and 10b-5(c)

thereunder; and Sections 206(1) and 206(2) of the Investment Advisers Act

(“Advisers Act”).

6. Based on these violations, in this lawsuit the Commission seeks:

(a) entry of a permanent injunction prohibiting Paris and BAM from further

violations of the relevant provisions of the federal securities laws;

(b) disgorgement of ill-gotten gains for the period covered by the applicable

statute of limitations, plus pre-judgement interest; and (c) the imposition of civil

monetary penalties.

JURISDICTION AND VENUE

7. The SEC brings this action under Section 20(b) of the Securities

Act [15 U.S.C. §77t(b)]; Sections 21(d) and 21(e) of the Exchange Act of 1934

[15 U.S.C. §§78u(d) and 78u(e)]; and Section 209(d) of the Advisers Act [15

U.S.C. § 80b-9(d)].

8. This Court has jurisdiction over this action under Section 22 of the

Securities Act [15 U.S.C. § 77v]; Section 27 of the Exchange Act [15 U.S.C. §

78aa]; Section 214 of the Advisers Act [15 U.S.C. § 80b-14]; and 28 U.S.C. §

1331.

9. Venue is proper in this Court under Section 27 of the Exchange

Act [15 U.S.C. § 78aa]. Acts, practices and courses of business constituting

violations alleged herein have occurred within the jurisdiction of the United

States District Court for the Northern District of Illinois and elsewhere.

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10. Defendants directly and indirectly made use of the means and

instrumentalities of interstate commerce and of the mails in connection with the

acts, practices, and courses of business alleged below, and will continue to do so

unless enjoined.

DEFENDANTS

11. Defendant Gregory David Paris, age 51, is a resident of

Barrington, Illinois. He serves as the chief operations officer, vice-president and

chief compliance officer of BAM. Paris is a certified public accountant and an

attorney authorized to practice law in Illinois. He has worked in the securities

industry for more than 20 years, and holds several licenses conferred by the

Financial Industry Regulatory Authority.

12. Defendant Barrington Asset Management, Inc. is an Illinois

corporation headquartered in Chicago, Illinois. BAM is registered as an

investment adviser in Illinois and Georgia. Until 2012, it was registered as an

investment adviser with the SEC. Paris owns 15% of BAM and, together with

his brother, oversees its day-to-day operations.

OTHER RELEVANT PARTIES

13. Barrington Research Associates, Inc. (“BRAI”) is an Illinois

corporation headquartered in Chicago, Illinois. BRAI has been registered with

the SEC as a broker-dealer since 1983. BRAI serves mainly institutional

customers, providing research on small cap companies and trade execution

services. Paris owns 28% of BRAI’s equity. BRAI executes all trades for BAM

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accounts.

FACTS

14. BAM is the investment adviser for about 45 individual advisory

clients, all on a discretionary basis. BAM is also the investment adviser to the

Barrington Opportunity Fund (“BOF”), a private fund that invests in equities.

During the Relevant Period, the BOF had seven limited partners with about

$2.4 million in assets.

15. Paris made investment decisions for about ten of BAM’s

individual advisory clients and the BOF (collectively, the “BAM Clients”).

16. Paris made trades for his personal account and BAM Clients’

accounts using an “omnibus account.” He later distributed those trades to a

selected client account or to himself.

17. An investment adviser sometimes uses an omnibus account when

making a large purchase of stock for several different clients at the same time. In

general, an omnibus trading account allows an investment adviser to buy and

sell securities on behalf of multiple clients simultaneously, without identifying to

the broker the specific accounts for which a trade is intended in advance.

18. For example, if an adviser separately purchases the same security

for several clients on the same day, the adviser might obtain different prices on

each transaction because of normal market fluctuation. Rather than placing

individual orders in each client account, the adviser can place an aggregated

order, or “block trade,” in the omnibus account and later allocate the trade

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among multiple accounts using an average price.

19. When used properly, an adviser will fairly allocate the block trade

from the omnibus account among client accounts, ensuring that no account

receives preferential treatment over another.

20. When Paris bought stock using the omnibus account, on the other

hand, he typically delayed making any allocation to another account until the

end of the day. This delay enabled Paris to watch how the stock performed

during the trade day, which in turn allowed him to allocate trades based solely

on the stock’s intraday performance.

21. When the price of the stock went up during the trade day, Paris

often allocated it to himself. But when the price of the stock went down during

the trade day, Paris often allocated the stock to the account of a BAM Client.

22. In many cases, when a stock Paris bought increased in value, he

locked in gains by selling the security in a day trade before allocating the

winning trade to himself at the end of the trade day. Once he had guaranteed

his profit, Paris then allocated both the purchase and the sale of the stock to

himself, realizing an immediate profit for himself without having assumed any

risk.

23. By contrast, in many cases when a stock Paris bought in the

omnibus account decreased in value, Paris allocated the losing trades to a BAM

Client. Paris typically held these stocks in the BAM Client accounts beyond the

trade day. The value of these holdings could either rise or fall after the trade

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day. But Paris’s fraudulent allocations unfairly deprived his clients of unrealized

first-day profits, while saddling them with unrealized first-day losses.

24. Paris often traded in the same securities as the BAM clients on

consecutive days. For such trading, he usually outperformed his clients.

25. The day trades that Paris allocated to himself generated a daily

return of 0.94%, amounting to $626,058 in profits for himself. But the 60-day

trades he allocated to BAM Clients during the Relevant Period had a

-4.74% return, creating losses for his clients exceeding $100,000.

26. Paris never told the affected clients about his cherry-picking.

Trading at “Clearing Broker A”
(December 2015 – February 2019)

27. A “clearing broker” provides trade execution and clearing services

to an “introducing broker,” here BRAI, and serves as the custodian for the

introducing broker’s client accounts. Paris traded in omnibus accounts at two

different clearing brokers during the Relevant Period.

28. From December 9, 2015 until February 10, 2019 (“Broker A

Period”), a clearing broker referred to in this Complaint as “Clearing Broker A”

served as BRAI’s clearing broker. Trades for the BAM clients were executed on

Clearing Broker A’s platform.

29. During the Broker A Period, Paris could place trades for himself

and the BAM Clients in two ways. Paris could buy or sell securities directly in

his personal account or a BAM Client account. Alternatively, he could make

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trades in an omnibus account and later allocate them to his personal account or

to the BAM Clients’ accounts.

30. Throughout the Broker A Period, Paris chose to place trades for

himself and the BAM Clients through the omnibus account. By using the

omnibus account, Paris could wait until after the markets closed to allocate

trades to a particular account. During this timeframe, Paris allocated about 93%

of his trades after the close of trading.

31. During the Broker A Period, Paris used a web-based application

called “rep order entry” to enter all trades for himself and BAM Clients. Paris

did not complete written order tickets or maintain other documentation for

these trades. Thus, no one could review such trades to confirm that Paris had

allocated them fairly.

32. Only about half of all Paris’s trades during the Broker A Period

were profitable at the end of the first day. About 61.7% of the 2,703 trades Paris

allocated from the omnibus account to himself, on the other hand, were

profitable. This resulted in a first-day profit for Paris of $592,083 during the

Broker A Period, representing a cumulative first-day return of 0.82%.

33. By contrast, only 21.2% of the 1,219 trades that Paris allocated to

the BAM Clients during the Broker A Period were profitable at the end of the

trade day, creating a first-day loss for BAM’s clients of $557,196 and a first-day

return of -2.21%.

34. The probability of these allocations occurring randomly is less

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than one in a billion.

35. Paris often locked in a profit for himself by closing out a position

before he had even allocated the trade to himself. He did so for over 1,900 day

trades during the Broker A Period, guaranteeing himself one-day returns of

0.99%. These risk-free day trades accounted for 96% of the total first-day profits

in Paris’s account during this timeframe.

36. But if a trade was unprofitable on the first day, Paris usually

allocated it to a BAM Client and then held the position in the Client account. A

significant majority (68%) of all multi-day trades during this timeframe were

unprofitable on the first day. Paris allocated 70% of those unprofitable trades to

BAM’s Clients, who consequently suffered first-day losses of $466,240 during

the Broker A Period due to his unfair allocations.

37. Here is an example of Paris’s fraudulent conduct during the Broker

A Period: On October 13, 2016, Paris bought 3,000 shares of Direxion Daily

Gold Miners Index Bull 2X Shares (“NUGT”), an exchange-traded note tied to

a market-cap-weighted index of large gold and silver mining firms, for $12.09 a

share. He made this purchase in the omnibus account. Paris did not generate a

trade order ticket or other contemporaneous documentation confirming for

whom he intended the trade.

38. Paris delayed making any allocation of the trade until after the

market closed. This delay allowed him to monitor whether NUGT’s price rose

or fell during the rest of the trading day. At the end of the trading day, Paris

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sold the 3,000 shares for $12.60 each, for a profit of $1,545 that he allocated to

himself.

39. The next day, Paris bought 4,000 shares of NUGT for $12.52 a

share in the omnibus account. That afternoon, he sold all 4,000 shares for

$11.79 each and allocated that trade, with its $2,897 in losses, to the BOF.

40. The next trading day – October 17, 2016 – Paris bought 2,000

shares of NUGT for $11.99 a share in the omnibus account. He waited until

after the market closed to allocate this trade. That afternoon, he sold the shares

for $12.28 each and allocated that trade to himself with the $581 profit.

41. Paris’s trading in NUGT reflect classic cherry-picking; he picked

the profitable trades for himself and allocated the unprofitable trades to

Defendants’ clients.

42. This pattern pervades Paris’s trading throughout the Broker A

Period. The 50 best performing trades during this timeframe had first-day

returns of between 9.9% and 23.0%, with total first-day profits of $129,506.

Paris allocated all but one of these best performing trades to himself,

representing 99.8% of the profits from those trades.

43. On the other hand, Paris’s 50 worst performing trades during the

period had first-day losses of between 8.8% and 28.7%, with total first-day losses

of $160,705. Paris allocated 43 of these 50 worst performing trades to BAM’s

clients, amounting to 84.8% of the first-day losses from those trades.

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Trading at “Clearing Broker B”
(February 2019 through October 2019)

44. From February 11, 2019 through October 11, 2019 (“Broker B

Period”), BRAI cleared trades for the BAM clients through a different clearing

broker, who is referred to in this Complaint as “Clearing Broker B”.

45. During the Broker B Period, BRAI placed all its trades, including

for the BAM Clients and for Paris, in a single firm omnibus account. Although

the trades had a corresponding order ticket purporting to reflect the intended

allocation when the trade order was entered, Paris and other traders did not

input the allocations into the system until later that day, including after the

close. Paris usually performed the allocations for the trades that he initiated

himself. During the Broker B Period, the BRAI electronic order system showed

Paris as the client on almost all the trades he placed.

46. Paris created written order tickets for his trades during the Broker

B Period. Those tickets were usually inaccurate, incomplete, or inconsistent

with the information reflected in BRAI’s own electronic order system.

47. Here is an example of Paris’s cherry-picking misconduct during

the Broker B Period: On August 20, 2019, Paris bought 3,000 shares of Whiting

Petroleum Corp. (“WLL”), an oil and gas company whose stock trades on the

New York Stock Exchange, for $8.16 a share. He placed the trade in an

omnibus account. Later that day, Paris sold the stock for $8.42 a share and gave

the trade to himself, along with the $770 in locked-in profits.

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48. The next day, August 21, 2019, Paris bought 3,000 shares of

WLL, this time for $8.55 a share, which he placed in the omnibus account. The

stock rose during the day, and that afternoon Paris sold the stock for $8.73 a

share. He allocated the trade – and the $529 in locked-in profits – to himself.

49. The next day, August 22, 2019, Paris bought 5,000 shares of WLL

for $8.54 a share, which he placed in the omnibus account. The stock dropped

over the course of the day, closing at $8.21 a share. Paris gave the trade – with

its $2,200 in unrealized losses – to the clients in the BOF account.

50. The same thing happened the next day, August 23, 2019. Paris

bought 2,500 shares of WLL for $7.55, which went in an omnibus account. By

trading day’s end, the stock had dropped to $7.03. He allocated the trade to the

BOF, along with the $1,300 in unrealized losses.

51. The next trading day, August 26, 2019, was more of the same.

Paris bought 4,000 shares of WLL for $7.11 per share, which he placed in an

omnibus account. The stock dropped during the trading day, closing at $6.78

per share. Paris gave the trade to his clients, who thus suffered another $1,300 in

unrealized losses.

52. Whiting Petroleum’s stock rebounded the next day, August 27,

2019. That morning Paris bought 5,000 shares of WLL for $6.68 a share, which

he put in an omnibus account. The stock rose to $6.80 by the end of the trading

day, and Paris allocated the trade to himself, with its unrealized profits of $615.

53. The pattern described above manifested itself in Paris’s trading in

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other securities that he traded for both himself and Defendants’ clients during

the Broker B Period.

54. Only about half of the trades Paris placed in the omnibus account

during the Broker B Period were profitable at the end of the trade day. Paris

allocated over 55% of those profitable trades to himself, creating a first-day

profit for himself of $59,494, a one-day return of 0.62%. Meanwhile, only

30.1% of the 142 trades allocated to the BOF account were profitable at the end

of the trade day, generating a first-day loss for the BOF of $69,072 and a one-

day return of -1.98%.

55. During the Broker B Period, Paris often locked-in a profit for his

own account by selling positions that had increased in value during the trade

day. He used this risk-free method to allocate 280 profitable day trades to

himself after he had closed out the position, achieving a one-day return during

the Broker B Period of 0.54%, amounting to $37,926.

56. The probability of Paris achieving such returns randomly was less

than one in a billion.

57. Paris’s trading throughout the Broker B Period reflects a pattern of

picking the profitable trades for himself and allocating unprofitable trades to the

BAM Clients. The 50 best performing trades Paris placed during this period had

first-day returns of between 4.5% and 15.3%, with total first-day profits of

$69,355. Paris allocated 47 of the 50 best performing trades to himself,

representing 97.6% of the profits from those trades. The 50 worst performing

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trades during the Broker B Period had first-day losses of between 3.2% and

9.1%, with total first-day losses of $60,684. Paris allocated 29 of these trades to

the BAM Clients, saddling them with 68.9% of the first-day losses.

The Results of Paris’s Fraudulent Scheme

58. Paris’s ill-gotten gains during the Broker A Period and the Broker

B Period were collectively more than $630,000 – the difference between the

first-day profits from allocations to Paris, and his pro rata share of the

cumulative losses on all trades in the omnibus accounts during the Relevant

Period.

59. Paris knowingly or recklessly engaged in a fraudulent scheme to

cherry-pick securities trades for his personal benefit to the detriment of the

BAM Clients. He also acted unreasonably when carrying out the cherry-picking

scheme.

60. Because Paris is a co-owner and principal of the firm, his state of

mind in carrying out the cherry-picking scheme is imputed to BAM.

BAM’s Inaccurate Brochures

61. During the relevant period, BAM filed various “Forms ADV”

with the Investment Advisory Registration Depository. Investment advisers use

the Form ADV to register with Commission or state securities authorities. The

filing consists of two parts—Part 1 contains “check-the-box” information about

the firm; Part 2 is a brochure, in narrative form, describing key information

about the firm, including the types of services the firm provides. An investment

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adviser must update its Form ADV annually, which it must make available to

firm clients.

62. From at least March 2016 through the present, BAM made false

and misleading statements in its Brochures concerning trade allocations and

review of employee trading. Paris worked with a consultant to draft the

Brochures, and he reviewed and approved the statements in the Brochures

before BAM disseminated them. All versions of BAM’s Brochures contained

the same language discussed below.

63. First, the Brochures contained misleading statements about trade

allocation, such as (1) “transactions [in the omnibus accounts] will be allocated

among Barrington’s clients in proportion to the purchase and sale orders placed

for each client account on a given day”; and (2) “Barrington seeks to minimize

the risk that any advisory client could be systematically advantaged or

disadvantaged in connection with such batching and to ensure that all clients

are treated fairly in the batching and allocation of portfolio transactions.”

64. These statements were misleading because – for at least Paris’s

cherry picking trades, and contrary to what it told its clients – BAM did not

allocate the transactions among clients based on orders for each client. Rather,

BAM allocated them based on whether the price of the security went up or

down on that particular day.

65. Contrary to BAM’s representations in its Brochures, during the

Broker A Period, the firm had no process for reviewing or confirming the

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accuracy of allocations from the omnibus account.

66. A reasonable investor reading the statement that “Barrington seeks

to minimize the risk that any advisory client could be systematically advantaged

or disadvantaged . . . and to ensure that all clients are treated fairly in the

batching and allocation of portfolio transactions,” would have assumed that

BAM’s had such processes.

67. Second, the Brochures falsely stated that “no person employed by

the firm shall prefer his or her own interest to that of an advisory client” and

that “[e]mployee trading is reviewed on a regular basis.” These statements are

false because Paris engaged in a cherry-picking scheme to benefit himself at the

expense of BAM Clients’ accounts, and because no one reviewed the trading in

Paris’s account despite a written policy requiring a compliance or other officer

to review employees’ personal trades. Because Paris knew of his cherry-picking

scheme, he also knew these statements were false.

68. A reasonable investor would have wanted to know that BAM was

not adhering to its own procedures for ensuring that BAM Clients were treated

fairly and that, contrary to the Brochures’ representations, Paris preferred his

own interest to that of an advisory client.

69. Defendants knew that because of the cherry-picking scheme the

Brochures’ representations – that BAM allocated portfolio transactions based

on purchase and sale orders, and that no person employed by the firm would

prefer his own interest to that of an advisory client – were false.

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COUNT I

Violations of Section 17(a) of the Securities Act
(Against Both Defendants)

70. Paragraphs 1 through 69 are realleged and incorporated by

reference as though fully set forth herein.

71. By engaging in the conduct described above, Defendants, in the

offer and sale of securities, by the use of the means and instruments of

transportation or communication in interstate commerce or by use of the mails,

directly or indirectly, have (a) employed devices, schemes and artifices to

defraud; (b) obtained money and property by means of untrue statements of

material fact and by omitting to state material facts necessary to make the

statements made, in light of the circumstances under which they were made,

not misleading; and (c) engaged in transactions, practices, and courses of

business which operated or would operate as a fraud or deceit upon the

purchasers of such securities.

72. Defendants obtained money or property by means of the scheme

and the misrepresentations, in the form of advisory fees they collected from

their defrauded clients. Paris also obtained illicit profits through his scheme, as

set forth above, which BAM enabled by failing to review Paris’s trading and

allocations.

73. Defendants acted knowingly, or with extreme recklessness, in

engaging in the scheme and the misrepresentations described above. Paris’s

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scienter is imputed to BAM.

74. Defendants also acted negligently in engaging in the conduct

described above.

75. By engaging in the conduct described above, Defendants violated

Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act [15 U.S.C. §§

77q(a)(1), 77q(a)(2), and 77q(a)(3)].

COUNT II

Violations of Section 10(b) of the Exchange Act,
and Exchange Act Rule 10b-5

(Against Both Defendants)

76. Paragraphs 1 through 69 are realleged and incorporated by

reference.

77. As detailed in paragraphs 1 through 69 above, Defendants, in

connection with the purchase and sale of securities, by the use of the means and

instrumentalities of interstate commerce and by the use of the mails, directly

and indirectly: used and employed devices, schemes and artifices to defraud;

made untrue statements of material fact and omitted to state material facts

necessary in order to make the statements made, in light of the circumstances

under which they were made, not misleading; and engaged in acts, practices

and courses of business which operated or would have operated as a fraud and

deceit upon purchasers and sellers and prospective purchasers and sellers of

securities.

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78. Defendants acted knowingly, or with extreme recklessness, in

engaging in the fraudulent conduct described above. Paris’s scienter is imputed

to BAM.

79. Through the foregoing, Defendants violated Section 10(b) of the

Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 thereunder [17 C.F.R.

240.10b-5].

COUNT III

Violations of Advisers Act Sections 206(1) and 206(2)
(Against Both Defendants)

80. Paragraphs 1 through 69 are realleged and incorporated by

reference.

81. As detailed in paragraphs 1 through 69 above, at all times alleged

here, Defendants, while acting as investment advisers, and in breach of their

fiduciary duties, by use of the mails, and the means and instrumentalities of

interstate commerce, directly or indirectly, knowingly, willfully or recklessly:

(i) employed devices, schemes or artifices to defraud its clients or prospective

clients; and (ii) engaged in transactions, practices and courses of business which

have operated as a fraud or deceit upon its clients or prospective clients.

82. Defendants as investment advisers owed affirmative fiduciary

duties of loyalty, fairness and good faith to their discretionary account

customers. These duties required Defendants to, among other things, act in the

best interest of their customers when making trading or allocation decisions.

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Defendants violated Sections 206(1) and 206(2) and breached their fiduciary

duties by engaging in the cherry-picking scheme discussed above, and by

making materially misleading statements in BAM’s brochures.

83. Defendants acted knowingly, or with extreme recklessness, in

engaging in the scheme and the misrepresentations described above. Paris’s

scienter is imputed to BAM.

84. Defendants also acted negligently in engaging in the conduct

described above.

85. Through the foregoing, Defendants violated Sections 206(1) and

206(2) of the Advisers Act. [15 U.S.C. §§ 80b-6(1) and 80b-6(2)].

COUNT IV
Aiding and Abetting Violations of

Advisers Act Sections 206(1) and 206(2)
(Pled in the Alternative to Count III Against Defendant Paris Only)

86. Paragraphs 1 through 69 are realleged and incorporated by

reference.

87.  As detailed in paragraphs 1 through 69 above and as alleged in

Count III above, Defendant BAM committed primary violations of Sections

206(1) and 206(2) of the Advisers Act.

88. Defendant Paris knowingly or recklessly provided substantial

assistance to Defendant BAM’s violations by, among other things, breaching

his fiduciary duties of loyalty, fairness and good faith to his discretionary

account customers by engaging in the cherry-picking scheme discussed above,

and by making materially misleading statements in BAM’s brochures.

89. Defendant Paris also acted negligently in engaging in the conduct

described above.

90. By reason of the foregoing and pursuant to Section 209(f) of the

Advisors Act [15 U.S.C. § 80b-9(f)], Defendant Paris, knowingly or recklessly

aided, abetted, counseled, commanded, induced, or procured Defendant

BAM’s violations of Sections 206(1) and (2) of the Advisors Act. [15 U.S.C. §§

80b-6(1) and 80b-6(2)].

RELIEF REQUESTED

 WHEREFORE, the Commission requests that this Court:

I.

 Permanently enjoin Defendants, their officers, agents, servants,

employees, attorneys and those persons in active concert or participation with

Defendants who receive actual notice of the order of this Court, by personal

service or otherwise, and each of them from, directly or indirectly, engaging in

the transactions, acts, practices or courses of business described above, or in

conduct of similar purport and object, in violation of Section 17(a) of the

Securities Act [15 U.S.C. § 77q(a)]; Section 10(b) [15 U.S.C. § 78j] and Rule

10b-5 of the Exchange Act [17 CFR § 240.10b-5]; and Sections 206(1) and

206(2) of the Advisers Act [15 U.S.C. §§ 80b-6(1) and 80b-6(2)].

II.

Order Paris to disgorge the ill-gotten gains received because of the

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violations alleged here, including prejudgment interest, pursuant to Section

21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(5), and

78u(d)(7)].

III.

Order Defendants to pay civil penalties pursuant to Section 20(d) of the

Securities Act [15 U.S.C. § 77t(d)]; Section 21(d)(3) of the Exchange Act [15

U.S.C. § 78u(d)(3)]; and Section 209(e) of the Advisers Act [15 U.S.C. § 80b-

9(e)].

IV.

 Grant any other relief this Court deems appropriate.

JURY DEMAND

 The Commission requests a trial by jury.

      UNITED STATES SECURITIES
      AND EXCHANGE COMMISSION

      By: /s/ Jonathan S. Polish
Jonathan S. Polish

  Peter Senechalle
Attorneys for Plaintiff

      U.S. SECURITIES AND
        EXCHANGE COMMISSION
      175 West Jackson Blvd., Suite 1450
      Chicago, IL 60604
     Telephone: (312) 353-7390

Dated: June 28, 2021

IN THE UNITED STATES DISTRICT COURT 
FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 
 
 

UNITED STATES SECURITIES 
AND EXCHANGE COMMISSION,  
    
                         Plaintiff,    
     

) 
) 
) 
) 
) 

 

                                       v. )   No. 21-cv-3450 
 )  
GREGORY DAVID PARIS and  
BARRINGTON ASSET MANAGEMENT, 
INC.  
 
                         Defendants. 

) 
) 
) 
) 
) 

  JURY DEMANDED 

 )  
_______________________________________ )  

COMPLAINT 

  Plaintiff United States Securities and Exchange Commission (“SEC”) 

alleges: 

1. This case involves a fraudulent cherry-picking scheme carried out 

by Defendants Gregory David Paris (“Paris”) and Barrington Asset 

Management, Inc. (“BAM”) (together, Paris and BAM are the “Defendants”). 

BAM is an investment adviser registered in Illinois and Georgia. Paris is 

BAM’s vice-president and chief compliance officer. From at least December 

2015 through October 2019 (“Relevant Period”), Paris secretly enriched himself 

at the expense of Defendants’ clients. All told, Paris received more than 

$630,000 in ill-gotten gains from his deceptive scheme.  

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2. “Cherry-picking” is when an investment adviser defrauds his 

clients by purchasing stock and then waiting to see whether the price of the 

stock goes up, or down, before allocating the trade. If the stock goes up, he 

keeps the trade for himself. If the stock goes down, he puts the trades into client 

accounts. He “cherry-picks” the profitable trades for himself and gives the 

unprofitable ones to his clients. Oftentimes Paris closed out a profitable position 

before he allocated the trade for himself – giving himself locked-in, guaranteed 

profits.  

3. Through this cherry-picking scheme, Paris misappropriated profits 

that should have gone to Defendants’ clients, and avoided losses that Paris 

should have borne himself.  

4. Defendants also misrepresented how they were trading securities 

for their clients. In documents BAM sent to its clients, which Paris reviewed 

and approved, Defendants represented that the trades made on the clients’ 

behalf were being fairly allocated among the client accounts. The firm also 

represented that “no person employed by the firm shall prefer his or her own 

interest to that of an advisory client” and that the firm reviewed employees’ 

personal trading activity. These claims were false, as Paris was cherry-picking 

trades, and no one was reviewing his personal trading activity. 

5. Through this misconduct, Defendants violated various antifraud 

statues and Commission rules, including Sections 17(a)(1), 17(a)(2) and 17(a)(3) 

of the Securities Act of 1933 (“Securities Act”); Section 10(b) of the Securities 

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Exchange Act (“Exchange Act”) and Ruled 10b-5(a), 10b-5(b) and 10b-5(c) 

thereunder; and Sections 206(1) and 206(2) of the Investment Advisers Act 

(“Advisers Act”). 

6. Based on these violations, in this lawsuit the Commission seeks: 

(a) entry of a permanent injunction prohibiting Paris and BAM from further 

violations of the relevant provisions of the federal securities laws;  

(b) disgorgement of ill-gotten gains for the period covered by the applicable 

statute of limitations, plus pre-judgement interest; and (c) the imposition of civil 

monetary penalties. 

JURISDICTION AND VENUE 

7. The SEC brings this action under Section 20(b) of the Securities 

Act [15 U.S.C. §77t(b)]; Sections 21(d) and 21(e) of the Exchange Act of 1934 

[15 U.S.C. §§78u(d) and 78u(e)]; and Section 209(d) of the Advisers Act [15 

U.S.C. § 80b-9(d)]. 

8. This Court has jurisdiction over this action under Section 22 of the 

Securities Act [15 U.S.C. § 77v]; Section 27 of the Exchange Act [15 U.S.C. § 

78aa]; Section 214 of the Advisers Act [15 U.S.C. § 80b-14]; and 28 U.S.C. § 

1331. 

9. Venue is proper in this Court under Section 27 of the Exchange 

Act [15 U.S.C. § 78aa]. Acts, practices and courses of business constituting 

violations alleged herein have occurred within the jurisdiction of the United 

States District Court for the Northern District of Illinois and elsewhere. 

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10. Defendants directly and indirectly made use of the means and 

instrumentalities of interstate commerce and of the mails in connection with the 

acts, practices, and courses of business alleged below, and will continue to do so 

unless enjoined. 

DEFENDANTS 

11. Defendant Gregory David Paris, age 51, is a resident of 

Barrington, Illinois. He serves as the chief operations officer, vice-president and 

chief compliance officer of BAM. Paris is a certified public accountant and an 

attorney authorized to practice law in Illinois. He has worked in the securities 

industry for more than 20 years, and holds several licenses conferred by the 

Financial Industry Regulatory Authority.  

12. Defendant Barrington Asset Management, Inc. is an Illinois 

corporation headquartered in Chicago, Illinois. BAM is registered as an 

investment adviser in Illinois and Georgia. Until 2012, it was registered as an 

investment adviser with the SEC. Paris owns 15% of BAM and, together with 

his brother, oversees its day-to-day operations.  

OTHER RELEVANT PARTIES 

13. Barrington Research Associates, Inc. (“BRAI”) is an Illinois 

corporation headquartered in Chicago, Illinois. BRAI has been registered with 

the SEC as a broker-dealer since 1983. BRAI serves mainly institutional 

customers, providing research on small cap companies and trade execution 

services. Paris owns 28% of BRAI’s equity. BRAI executes all trades for BAM 

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accounts. 

FACTS  

14. BAM is the investment adviser for about 45 individual advisory 

clients, all on a discretionary basis. BAM is also the investment adviser to the 

Barrington Opportunity Fund (“BOF”), a private fund that invests in equities. 

During the Relevant Period, the BOF had seven limited partners with about 

$2.4 million in assets.  

15. Paris made investment decisions for about ten of BAM’s 

individual advisory clients and the BOF (collectively, the “BAM Clients”).  

16. Paris made trades for his personal account and BAM Clients’ 

accounts using an “omnibus account.” He later distributed those trades to a 

selected client account or to himself.  

17. An investment adviser sometimes uses an omnibus account when 

making a large purchase of stock for several different clients at the same time. In 

general, an omnibus trading account allows an investment adviser to buy and 

sell securities on behalf of multiple clients simultaneously, without identifying to 

the broker the specific accounts for which a trade is intended in advance.  

18. For example, if an adviser separately purchases the same security 

for several clients on the same day, the adviser might obtain different prices on 

each transaction because of normal market fluctuation. Rather than placing 

individual orders in each client account, the adviser can place an aggregated 

order, or “block trade,” in the omnibus account and later allocate the trade 

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among multiple accounts using an average price.  

19. When used properly, an adviser will fairly allocate the block trade 

from the omnibus account among client accounts, ensuring that no account 

receives preferential treatment over another. 

20. When Paris bought stock using the omnibus account, on the other 

hand, he typically delayed making any allocation to another account until the 

end of the day. This delay enabled Paris to watch how the stock performed 

during the trade day, which in turn allowed him to allocate trades based solely 

on the stock’s intraday performance. 

21. When the price of the stock went up during the trade day, Paris 

often allocated it to himself. But when the price of the stock went down during 

the trade day, Paris often allocated the stock to the account of a BAM Client.  

22. In many cases, when a stock Paris bought increased in value, he 

locked in gains by selling the security in a day trade before allocating the 

winning trade to himself at the end of the trade day. Once he had guaranteed 

his profit, Paris then allocated both the purchase and the sale of the stock to 

himself, realizing an immediate profit for himself without having assumed any 

risk.  

23. By contrast, in many cases when a stock Paris bought in the 

omnibus account decreased in value, Paris allocated the losing trades to a BAM 

Client. Paris typically held these stocks in the BAM Client accounts beyond the 

trade day. The value of these holdings could either rise or fall after the trade 

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day. But Paris’s fraudulent allocations unfairly deprived his clients of unrealized 

first-day profits, while saddling them with unrealized first-day losses.  

24. Paris often traded in the same securities as the BAM clients on 

consecutive days. For such trading, he usually outperformed his clients.  

25. The day trades that Paris allocated to himself generated a daily 

return of 0.94%, amounting to $626,058 in profits for himself. But the 60-day 

trades he allocated to BAM Clients during the Relevant Period had a  

-4.74% return, creating losses for his clients exceeding $100,000. 

26. Paris never told the affected clients about his cherry-picking.  

Trading at “Clearing Broker A” 
(December 2015 – February 2019) 

27. A “clearing broker” provides trade execution and clearing services 

to an “introducing broker,” here BRAI, and serves as the custodian for the 

introducing broker’s client accounts. Paris traded in omnibus accounts at two 

different clearing brokers during the Relevant Period. 

28. From December 9, 2015 until February 10, 2019 (“Broker A 

Period”), a clearing broker referred to in this Complaint as “Clearing Broker A” 

served as BRAI’s clearing broker. Trades for the BAM clients were executed on 

Clearing Broker A’s platform.  

29. During the Broker A Period, Paris could place trades for himself 

and the BAM Clients in two ways. Paris could buy or sell securities directly in 

his personal account or a BAM Client account. Alternatively, he could make 

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trades in an omnibus account and later allocate them to his personal account or 

to the BAM Clients’ accounts.  

30. Throughout the Broker A Period, Paris chose to place trades for 

himself and the BAM Clients through the omnibus account. By using the 

omnibus account, Paris could wait until after the markets closed to allocate 

trades to a particular account. During this timeframe, Paris allocated about 93% 

of his trades after the close of trading. 

31. During the Broker A Period, Paris used a web-based application 

called “rep order entry” to enter all trades for himself and BAM Clients. Paris 

did not complete written order tickets or maintain other documentation for 

these trades. Thus, no one could review such trades to confirm that Paris had 

allocated them fairly. 

32. Only about half of all Paris’s trades during the Broker A Period 

were profitable at the end of the first day. About 61.7% of the 2,703 trades Paris 

allocated from the omnibus account to himself, on the other hand, were 

profitable. This resulted in a first-day profit for Paris of $592,083 during the 

Broker A Period, representing a cumulative first-day return of 0.82%.  

33. By contrast, only 21.2% of the 1,219 trades that Paris allocated to 

the BAM Clients during the Broker A Period were profitable at the end of the 

trade day, creating a first-day loss for BAM’s clients of $557,196 and a first-day 

return of -2.21%.  

34. The probability of these allocations occurring randomly is less 

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than one in a billion.  

35. Paris often locked in a profit for himself by closing out a position 

before he had even allocated the trade to himself. He did so for over 1,900 day 

trades during the Broker A Period, guaranteeing himself one-day returns of 

0.99%. These risk-free day trades accounted for 96% of the total first-day profits 

in Paris’s account during this timeframe. 

36. But if a trade was unprofitable on the first day, Paris usually 

allocated it to a BAM Client and then held the position in the Client account. A 

significant majority (68%) of all multi-day trades during this timeframe were 

unprofitable on the first day. Paris allocated 70% of those unprofitable trades to 

BAM’s Clients, who consequently suffered first-day losses of $466,240 during 

the Broker A Period due to his unfair allocations.  

37. Here is an example of Paris’s fraudulent conduct during the Broker 

A Period: On October 13, 2016, Paris bought 3,000 shares of Direxion Daily 

Gold Miners Index Bull 2X Shares (“NUGT”), an exchange-traded note tied to 

a market-cap-weighted index of large gold and silver mining firms, for $12.09 a 

share. He made this purchase in the omnibus account. Paris did not generate a 

trade order ticket or other contemporaneous documentation confirming for 

whom he intended the trade.  

38. Paris delayed making any allocation of the trade until after the 

market closed. This delay allowed him to monitor whether NUGT’s price rose 

or fell during the rest of the trading day. At the end of the trading day, Paris 

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sold the 3,000 shares for $12.60 each, for a profit of $1,545 that he allocated to 

himself.  

39. The next day, Paris bought 4,000 shares of NUGT for $12.52 a 

share in the omnibus account. That afternoon, he sold all 4,000 shares for 

$11.79 each and allocated that trade, with its $2,897 in losses, to the BOF.  

40. The next trading day – October 17, 2016 – Paris bought 2,000 

shares of NUGT for $11.99 a share in the omnibus account. He waited until 

after the market closed to allocate this trade. That afternoon, he sold the shares 

for $12.28 each and allocated that trade to himself with the $581 profit.  

41. Paris’s trading in NUGT reflect classic cherry-picking; he picked 

the profitable trades for himself and allocated the unprofitable trades to 

Defendants’ clients.  

42. This pattern pervades Paris’s trading throughout the Broker A 

Period. The 50 best performing trades during this timeframe had first-day 

returns of between 9.9% and 23.0%, with total first-day profits of $129,506. 

Paris allocated all but one of these best performing trades to himself, 

representing 99.8% of the profits from those trades.  

43. On the other hand, Paris’s 50 worst performing trades during the 

period had first-day losses of between 8.8% and 28.7%, with total first-day losses 

of $160,705. Paris allocated 43 of these 50 worst performing trades to BAM’s 

clients, amounting to 84.8% of the first-day losses from those trades. 

 

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Trading at “Clearing Broker B”  
(February 2019 through October 2019) 

44. From February 11, 2019 through October 11, 2019 (“Broker B 

Period”), BRAI cleared trades for the BAM clients through a different clearing 

broker, who is referred to in this Complaint as “Clearing Broker B”.  

45. During the Broker B Period, BRAI placed all its trades, including 

for the BAM Clients and for Paris, in a single firm omnibus account. Although 

the trades had a corresponding order ticket purporting to reflect the intended 

allocation when the trade order was entered, Paris and other traders did not 

input the allocations into the system until later that day, including after the 

close. Paris usually performed the allocations for the trades that he initiated 

himself. During the Broker B Period, the BRAI electronic order system showed 

Paris as the client on almost all the trades he placed.  

46. Paris created written order tickets for his trades during the Broker 

B Period. Those tickets were usually inaccurate, incomplete, or inconsistent 

with the information reflected in BRAI’s own electronic order system.  

47. Here is an example of Paris’s cherry-picking misconduct during 

the Broker B Period: On August 20, 2019, Paris bought 3,000 shares of Whiting 

Petroleum Corp. (“WLL”), an oil and gas company whose stock trades on the 

New York Stock Exchange, for $8.16 a share. He placed the trade in an 

omnibus account. Later that day, Paris sold the stock for $8.42 a share and gave 

the trade to himself, along with the $770 in locked-in profits.  

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48. The next day, August 21, 2019, Paris bought 3,000 shares of 

WLL, this time for $8.55 a share, which he placed in the omnibus account. The 

stock rose during the day, and that afternoon Paris sold the stock for $8.73 a 

share. He allocated the trade – and the $529 in locked-in profits – to himself.  

49. The next day, August 22, 2019, Paris bought 5,000 shares of WLL 

for $8.54 a share, which he placed in the omnibus account. The stock dropped 

over the course of the day, closing at $8.21 a share. Paris gave the trade – with 

its $2,200 in unrealized losses – to the clients in the BOF account.  

50. The same thing happened the next day, August 23, 2019. Paris 

bought 2,500 shares of WLL for $7.55, which went in an omnibus account. By 

trading day’s end, the stock had dropped to $7.03. He allocated the trade to the 

BOF, along with the $1,300 in unrealized losses. 

51. The next trading day, August 26, 2019, was more of the same. 

Paris bought 4,000 shares of WLL for $7.11 per share, which he placed in an 

omnibus account. The stock dropped during the trading day, closing at $6.78 

per share. Paris gave the trade to his clients, who thus suffered another $1,300 in 

unrealized losses.  

52. Whiting Petroleum’s stock rebounded the next day, August 27, 

2019. That morning Paris bought 5,000 shares of WLL for $6.68 a share, which 

he put in an omnibus account. The stock rose to $6.80 by the end of the trading 

day, and Paris allocated the trade to himself, with its unrealized profits of $615.  

53. The pattern described above manifested itself in Paris’s trading in 

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other securities that he traded for both himself and Defendants’ clients during 

the Broker B Period.  

54. Only about half of the trades Paris placed in the omnibus account 

during the Broker B Period were profitable at the end of the trade day. Paris 

allocated over 55% of those profitable trades to himself, creating a first-day 

profit for himself of $59,494, a one-day return of 0.62%. Meanwhile, only 

30.1% of the 142 trades allocated to the BOF account were profitable at the end 

of the trade day, generating a first-day loss for the BOF of $69,072 and a one-

day return of -1.98%.  

55. During the Broker B Period, Paris often locked-in a profit for his 

own account by selling positions that had increased in value during the trade 

day. He used this risk-free method to allocate 280 profitable day trades to 

himself after he had closed out the position, achieving a one-day return during 

the Broker B Period of 0.54%, amounting to $37,926.  

56. The probability of Paris achieving such returns randomly was less 

than one in a billion. 

57. Paris’s trading throughout the Broker B Period reflects a pattern of 

picking the profitable trades for himself and allocating unprofitable trades to the 

BAM Clients. The 50 best performing trades Paris placed during this period had 

first-day returns of between 4.5% and 15.3%, with total first-day profits of 

$69,355. Paris allocated 47 of the 50 best performing trades to himself, 

representing 97.6% of the profits from those trades. The 50 worst performing 

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trades during the Broker B Period had first-day losses of between 3.2% and 

9.1%, with total first-day losses of $60,684. Paris allocated 29 of these trades to 

the BAM Clients, saddling them with 68.9% of the first-day losses. 

The Results of Paris’s Fraudulent Scheme 

58. Paris’s ill-gotten gains during the Broker A Period and the Broker 

B Period were collectively more than $630,000 – the difference between the 

first-day profits from allocations to Paris, and his pro rata share of the 

cumulative losses on all trades in the omnibus accounts during the Relevant 

Period.  

59. Paris knowingly or recklessly engaged in a fraudulent scheme to 

cherry-pick securities trades for his personal benefit to the detriment of the 

BAM Clients. He also acted unreasonably when carrying out the cherry-picking 

scheme. 

60. Because Paris is a co-owner and principal of the firm, his state of 

mind in carrying out the cherry-picking scheme is imputed to BAM. 

BAM’s Inaccurate Brochures 

61. During the relevant period, BAM filed various “Forms ADV” 

with the Investment Advisory Registration Depository. Investment advisers use 

the Form ADV to register with Commission or state securities authorities. The 

filing consists of two parts—Part 1 contains “check-the-box” information about 

the firm; Part 2 is a brochure, in narrative form, describing key information 

about the firm, including the types of services the firm provides. An investment 

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adviser must update its Form ADV annually, which it must make available to 

firm clients. 

62. From at least March 2016 through the present, BAM made false 

and misleading statements in its Brochures concerning trade allocations and 

review of employee trading. Paris worked with a consultant to draft the 

Brochures, and he reviewed and approved the statements in the Brochures 

before BAM disseminated them. All versions of BAM’s Brochures contained 

the same language discussed below. 

63. First, the Brochures contained misleading statements about trade 

allocation, such as (1) “transactions [in the omnibus accounts] will be allocated 

among Barrington’s clients in proportion to the purchase and sale orders placed 

for each client account on a given day”; and (2) “Barrington seeks to minimize 

the risk that any advisory client could be systematically advantaged or 

disadvantaged in connection with such batching and to ensure that all clients 

are treated fairly in the batching and allocation of portfolio transactions.”  

64. These statements were misleading because – for at least Paris’s 

cherry picking trades, and contrary to what it told its clients – BAM did not 

allocate the transactions among clients based on orders for each client. Rather, 

BAM allocated them based on whether the price of the security went up or 

down on that particular day.  

65. Contrary to BAM’s representations in its Brochures, during the 

Broker A Period, the firm had no process for reviewing or confirming the 

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accuracy of allocations from the omnibus account.  

66. A reasonable investor reading the statement that “Barrington seeks 

to minimize the risk that any advisory client could be systematically advantaged 

or disadvantaged . . . and to ensure that all clients are treated fairly in the 

batching and allocation of portfolio transactions,” would have assumed that 

BAM’s had such processes. 

67. Second, the Brochures falsely stated that “no person employed by 

the firm shall prefer his or her own interest to that of an advisory client” and 

that “[e]mployee trading is reviewed on a regular basis.” These statements are 

false because Paris engaged in a cherry-picking scheme to benefit himself at the 

expense of BAM Clients’ accounts, and because no one reviewed the trading in 

Paris’s account despite a written policy requiring a compliance or other officer 

to review employees’ personal trades. Because Paris knew of his cherry-picking 

scheme, he also knew these statements were false.  

68. A reasonable investor would have wanted to know that BAM was 

not adhering to its own procedures for ensuring that BAM Clients were treated 

fairly and that, contrary to the Brochures’ representations, Paris preferred his 

own interest to that of an advisory client.  

69. Defendants knew that because of the cherry-picking scheme the 

Brochures’ representations – that BAM allocated portfolio transactions based 

on purchase and sale orders, and that no person employed by the firm would 

prefer his own interest to that of an advisory client – were false.  

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COUNT I 

Violations of Section 17(a) of the Securities Act 
(Against Both Defendants) 

70. Paragraphs 1 through 69 are realleged and incorporated by 

reference as though fully set forth herein. 

71. By engaging in the conduct described above, Defendants, in the 

offer and sale of securities, by the use of the means and instruments of 

transportation or communication in interstate commerce or by use of the mails, 

directly or indirectly, have (a) employed devices, schemes and artifices to 

defraud; (b) obtained money and property by means of untrue statements of 

material fact and by omitting to state material facts necessary to make the 

statements made, in light of the circumstances under which they were made, 

not misleading; and (c) engaged in transactions, practices, and courses of 

business which operated or would operate as a fraud or deceit upon the 

purchasers of such securities.  

72. Defendants obtained money or property by means of the scheme 

and the misrepresentations, in the form of advisory fees they collected from 

their defrauded clients. Paris also obtained illicit profits through his scheme, as 

set forth above, which BAM enabled by failing to review Paris’s trading and 

allocations.  

73. Defendants acted knowingly, or with extreme recklessness, in 

engaging in the scheme and the misrepresentations described above. Paris’s 

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scienter is imputed to BAM. 

74. Defendants also acted negligently in engaging in the conduct 

described above. 

75. By engaging in the conduct described above, Defendants violated 

Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act [15 U.S.C. §§ 

77q(a)(1), 77q(a)(2), and 77q(a)(3)]. 

COUNT II 

Violations of Section 10(b) of the Exchange Act, 
and Exchange Act Rule 10b-5 

(Against Both Defendants) 

76. Paragraphs 1 through 69 are realleged and incorporated by 

reference. 

77. As detailed in paragraphs 1 through 69 above, Defendants, in 

connection with the purchase and sale of securities, by the use of the means and 

instrumentalities of interstate commerce and by the use of the mails, directly 

and indirectly: used and employed devices, schemes and artifices to defraud; 

made untrue statements of material fact and omitted to state material facts 

necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading; and engaged in acts, practices 

and courses of business which operated or would have operated as a fraud and 

deceit upon purchasers and sellers and prospective purchasers and sellers of 

securities. 

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78. Defendants acted knowingly, or with extreme recklessness, in 

engaging in the fraudulent conduct described above. Paris’s scienter is imputed 

to BAM. 

79. Through the foregoing, Defendants violated Section 10(b) of the 

Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 

240.10b-5]. 

COUNT III 

Violations of Advisers Act Sections 206(1) and 206(2) 
(Against Both Defendants) 

80. Paragraphs 1 through 69 are realleged and incorporated by 

reference. 

81. As detailed in paragraphs 1 through 69 above, at all times alleged 

here, Defendants, while acting as investment advisers, and in breach of their 

fiduciary duties, by use of the mails, and the means and instrumentalities of 

interstate commerce, directly or indirectly, knowingly, willfully or recklessly:  

(i) employed devices, schemes or artifices to defraud its clients or prospective 

clients; and (ii) engaged in transactions, practices and courses of business which 

have operated as a fraud or deceit upon its clients or prospective clients. 

82. Defendants as investment advisers owed affirmative fiduciary 

duties of loyalty, fairness and good faith to their discretionary account 

customers. These duties required Defendants to, among other things, act in the 

best interest of their customers when making trading or allocation decisions. 

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Defendants violated Sections 206(1) and 206(2) and breached their fiduciary 

duties by engaging in the cherry-picking scheme discussed above, and by 

making materially misleading statements in BAM’s brochures.  

83. Defendants acted knowingly, or with extreme recklessness, in 

engaging in the scheme and the misrepresentations described above. Paris’s 

scienter is imputed to BAM. 

84. Defendants also acted negligently in engaging in the conduct 

described above. 

85. Through the foregoing, Defendants violated Sections 206(1) and 

206(2) of the Advisers Act. [15 U.S.C. §§ 80b-6(1) and 80b-6(2)].  

COUNT IV 
Aiding and Abetting Violations of  

Advisers Act Sections 206(1) and 206(2) 
(Pled in the Alternative to Count III Against Defendant Paris Only) 

86. Paragraphs 1 through 69 are realleged and incorporated by 

reference. 

87.  As detailed in paragraphs 1 through 69 above and as alleged in 

Count III above, Defendant BAM committed primary violations of Sections 

206(1) and 206(2) of the Advisers Act. 

88. Defendant Paris knowingly or recklessly provided substantial 

assistance to Defendant BAM’s violations by, among other things, breaching 

his fiduciary duties of loyalty, fairness and good faith to his discretionary 

account customers by engaging in the cherry-picking scheme discussed above, 

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and by making materially misleading statements in BAM’s brochures. 

89. Defendant Paris also acted negligently in engaging in the conduct 

described above. 

90. By reason of the foregoing and pursuant to Section 209(f) of the 

Advisors Act [15 U.S.C. § 80b-9(f)], Defendant Paris, knowingly or recklessly 

aided, abetted, counseled, commanded, induced, or procured Defendant 

BAM’s violations of Sections 206(1) and (2) of the Advisors Act. [15 U.S.C. §§ 

80b-6(1) and 80b-6(2)]. 

RELIEF REQUESTED 

 WHEREFORE, the Commission requests that this Court: 

I. 

 Permanently enjoin Defendants, their officers, agents, servants, 

employees, attorneys and those persons in active concert or participation with 

Defendants who receive actual notice of the order of this Court, by personal 

service or otherwise, and each of them from, directly or indirectly, engaging in 

the transactions, acts, practices or courses of business described above, or in 

conduct of similar purport and object, in violation of Section 17(a) of the 

Securities Act [15 U.S.C. § 77q(a)]; Section 10(b) [15 U.S.C. § 78j] and Rule 

10b-5 of the Exchange Act [17 CFR § 240.10b-5]; and Sections 206(1) and 

206(2) of the Advisers Act [15 U.S.C. §§ 80b-6(1) and 80b-6(2)]. 

II. 

Order Paris to disgorge the ill-gotten gains received because of the 

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violations alleged here, including prejudgment interest, pursuant to Section 

21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. §§ 78u(d)(5), and 

78u(d)(7)]. 

III. 

Order Defendants to pay civil penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)]; Section 21(d)(3) of the Exchange Act [15 

U.S.C. § 78u(d)(3)]; and Section 209(e) of the Advisers Act [15 U.S.C. § 80b-

9(e)].  

IV. 

 Grant any other relief this Court deems appropriate. 
 

JURY DEMAND 

 The Commission requests a trial by jury.  

      UNITED STATES SECURITIES 
      AND EXCHANGE COMMISSION 

      By: /s/ Jonathan S. Polish 
Jonathan S. Polish 

  Peter Senechalle 
Attorneys for Plaintiff 

      U.S. SECURITIES AND  
        EXCHANGE COMMISSION 
      175 West Jackson Blvd., Suite 1450 
      Chicago, IL 60604 
     Telephone: (312) 353-7390 

Dated: June 28, 2021 

Case: 1:21-cv-03450 Document #: 1 Filed: 06/28/21 Page 22 of 22 PageID #:22