The SEC has accused Barrington Asset Management, Inc. and its COO Gregory Paris of running a years-long cherry-picking scheme and defrauding investors.
If you invested with Gregory Paris of Barrington Asset Management, Inc., you may be able to recover losses. The SEC claims that Gregory Paris fleeced investors out of hundreds of thousands by cherry-picking trades. Contact Sonn Law Group 24/7 for a free consultation. To do so call 844-689-5754 or reach us via email using our confidential online form.
Overview of the Case Against Barrington Asset Management, Inc.
The SEC published a litigation release on June 29, 2021, announcing that it filed charges against Chicago-based Barrington Asset Management, Inc. (“Barrington”) and its co-owner and chief operating officer, Gregory Paris, for perpetrating a multi-year cherry-picking scheme that defrauded clients of Barrington.
“Cherry-picking” is the fraudulent practice of allocating profitable and unprofitable trades into certain accounts on a preferential basis. Investment managers typically initiate block orders in the stock market to buy or sell for all of their customer accounts at the same time. The trades can either have gains or losses associated with them. Cherry picking occurs when the investment manager allocates the profitable trades into his or her personal account or into the accounts of favored customers, while allocating unprofitable trades to other accounts. The SEC prohibits cherry picking.
In its complaint, the SEC alleged that over a four year period, Paris reaped more than $630,000 in ill-gotten gains at the expense of his clients by cherry picking trades. Paris allegedly traded securities in Barrington’s omnibus account and delayed allocating the securities to specific client accounts until he observed how the securities performed over the course of the trading day. Paris then allocated profitable trades to his own account while allocating unprofitable trades to client accounts. Barrington and Paris purportedly misrepresented to clients that all trades would be allocated fairly and that the firm reviewed all personal trading by its employees.
The complaint charges Barrington and Paris with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. It also charges Paris, in the alternative, with aiding and abetting Barrington’s violations of Sections 206(1) and 206(2) of the Advisers Act. The SEC seeks injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.