RIA Compliance Blog
We previously posted about the Securities and Exchange Commission’s (SEC) enforcement action against Parker Terrill Austin (“Austin”) and Embarcadero Capital Advisors, Inc. (“Embarcadero”) for alleged misuse of client’s nonpublic personal information. In that case, each party consented to the entry of a separate judgment [against Austin and Embarcadero] last month. Those judgments also resolved allegations regarding misrepresentations by the same defendants.
In the complaint, in addition to the privacy claims, the SEC also alleged that Austin and Embarcadero made fraudulent misrepresentations in relation to the disclosure documents filed with the commission and given to clients. These allegations resulted in findings of violations of the antifraud provisions of Sections 206(1), 206(2), and 207 of the Investment Advisers Act of 1940.
The SEC’s complaint alleged the following fraudulent conduct. First, Austin and Embarcadero allegedly failed to accurately disclose the circumstances of Austin’s termination from his previous firm. The previous firm’s Form U5 stated that Austin was terminated for violating firm policies and procedures “related to the safekeeping of client records and adherence to fiduciary duty.” Embarcadero’s compliance consultant also advised that the matter should be disclosed in its Form CRS. However, Austin and Embarcadero allegedly continued using a Form CRS that did not disclose Austin’s disciplinary history.
Austin also allegedly failed to accurately disclose facts relevant to his termination on his initial Form U4. Only after the SEC began its investigation, Austin allegedly filed an amended Form U4, falsely stating that an associate at his previous firm had inadvertently sent client information to his personal email and that he had deleted it. The SEC alleged, however, that Austin caused the information to be forwarded to his future business partner and that Austin did not delete the information.
Both parties allegedly also failed to disclose Austin’s disciplinary history in Embarcadero’s Form ADV Part 2A, Item 9, and Part 2B brochures. As President and CEO, Austin allegedly had full control and authority over the content of the firm’s Form ADV filings. During investigative testimony with Commission staff, Embarcadero amended its ADV filings to disclose Austin’s disciplinary event and directed readers to www.adviserinfo.sec.gov for additional details. The SEC alleged, however, that the website contained only Austin’s initial Form ADV brochures, which did not disclose the true reason for his termination from his previous firm.
Finally, the SEC alleged that Austin and Embarcadero made false or misleading statements to clients, prospective clients, and vendors regarding the circumstances of Austin’s termination described above to induce clients to transfer their advisory accounts to Embarcadero.
On August 19, 2026, the U.S. District Court for the Central District of California entered a final judgment against Austin. The judgment permanently restrained and enjoined Austin from violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 by engaging in fraudulent or deceptive conduct toward clients or prospective clients and Section 207 of the Advisers Act by willfully making untrue statements of material fact in reports filed with the SEC engaging in fraudulent or deceptive conduct toward clients or prospective clients. In addition, the judgment imposed a three-year bar from associating with a broker-dealer or investment adviser and a $118,225 civil penalty.
The same day, the court entered a final judgment against Embarcadero. The judgment permanently restrained and enjoined Embarcadero from violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 by engaging in fraudulent or deceptive conduct toward clients or prospective clients and Section 207 of the Advisers Act by willfully making untrue statements of material fact in reports filed with the SEC engaging in fraudulent or deceptive conduct toward clients or prospective clients. In addition, Embarcadero was ordered to pay $147,505.06, consisting of $25,000 in disgorgement, $2,505.06 in prejudgment interest, and a $120,000 civil penalty.
Parker MacIntyre provides legal and compliance services to investment advisers, broker-dealers, registered representatives, hedge funds, and issuers of securities, among others. Our Investment Adviser Group assists financial service providers with complex issues that arise in the course of their business, including complying with federal and state laws and rules. Please visit our Investment Adviser Practice Group page for more information.