Litigation Release No. 25126 / June 29, 2021
Securities and Exchange Commission v. Gregory David Paris and Barrington Asset Management, Inc., o. 21-cv-03450 (N.D. Ill. filed June 28, 2021)
The Securities and Exchange Commission today filed charges against Chicago, Illinois-based Barrington Asset Management, Inc. and its co-owner and chief operating officer, Gregory D. Paris, for perpetrating a multi-year cherry-picking scheme that defrauded Barrington clients.
The SEC’s complaint, filed in the United States District Court for the Northern District of Illinois, alleges that over a four year period Paris reaped more than $630,000 in ill-gotten gains at his clients’ expense by cherry-picking trades. Paris allegedly traded securities in Barrington’s omnibus account and delayed allocating the securities to specific client accounts until he had observed the securities’ performance over the course of the trading day. As alleged, he then allocated profitable trades to his own account while allocating unprofitable trades to client accounts. The complaint also alleges that Barrington and Paris misrepresented to clients that all trades would be allocated fairly and that the firm reviewed all personal trading by its employees.
The SEC’s 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.
The investigation stems from the SEC’s Market Abuse Unit’s Analysis and Detection Center, which uses data analysis tools to detect suspicious patterns, including improbably successful trading. The SEC’s investigation was conducted by Peter Senechalle and Amy Flaherty Hartman of the Chicago Regional Office, with assistance from Ross Goetz and Frank A. Brown, II in the Division of Economic and Risk Analysis, and was supervised by Associate Director Kathryn L. Pyszka and Market Abuse Unit Chief, Joseph G. Sansone. The litigation will be led by Jonathan S. Polish.