SEC Bars Advisor for Unauthorized Trades and Client Data Misuse
From the desk of Jim Eccleston at Eccleston Law
A California-based investment adviser has agreed to a three-year industry bar and $266,000 in monetary sanctions after the Securities and Exchange Commission (SEC) accused him of making unauthorized trades, transferring confidential client information to a newly launched registered investment adviser, and concealing his termination from a former firm.
Parker Terrill Austin and his Laguna Hills firm, Embarcadero Capital Advisors, agreed to the sanctions without admitting or denying the SEC's allegations, according AdvisorHub. Austin will pay a $118,000 penalty. Embarcadero will pay a $120,000 penalty, $25,000 in disgorgement, and $2,505 in interest.
The SEC accused Austin and Embarcadero of violating the anti-fraud provisions of the Investment Advisers Act of 1940 and prohibitions against misleading statements in regulatory filings. The SEC also accused Austin of violating Rule 10 under Regulation S-P, which prohibits sharing private client information with unaffiliated third parties without prior notice and an opportunity to opt out.
AdvisorHub reports that Austin co-founded Embarcadero in January 2024, but he began preparing for the firm's launch in early 2023. According to the SEC, Austin used his work email to send billing information for hundreds of clients from his former firm, January Capital Advisors, to his personal email. He later sent January Capital's entire customer relationship database to a co-founder at Embarcadero.
The SEC also alleged that Austin placed 100 clients into a risky investment strategy in 2023 without approval from January Capital or the clients. January Capital discovered the investments in September 2023, audited Austin's email, and terminated him in December 2023.
After launching Embarcadero, Austin allegedly concealed his termination by publishing an outdated Form CRS that represented that the firm and its partners had clean records. According to AdvisorHub, when the SEC began investigating in 2024, Austin filed an amended U4 that blamed his assistant for the data breach and characterized his failure to report the violation as his only mistake.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, sec enforcement, securities law, investment adviser, unauthorized trading, client data privacy
