Adviser Builds His New Firm While At Another

It is axiomatic that an investment adviser is duty bound to act in the best interest of the client.  This means in part that the adviser must put the interests of the client before their personal interests.  Indeed, investment advisers must  be guided their by the dictates of the fiduciary duty owed to their clients.  That duty is the strongest known in the law. Stated differently, it must come before personal interests.  The Commission’s recent case in SEC v. Parker Terrill Austin, Civil Action No. 8:25-cv-0234 (C.D. Cal. Filed Sept. 2025) is a good example of this point.

Named as defendants in this action are:  Parker Terrill Austin and Embarcadero Capital Advisors, Inc.  Defendant Austin was an investment adviser representative.  He was registered with Embarcadero, a firm where he served as President and Chief Executive Officer.  Embarcadero is a California corporation based in Laguna Hills, CA.  The firm is a Commission registered investment adviser in Arizona, California, Nevada and Texas.

By the Spring of 2023, Mr. Parker had determined to leave his then current employer, Firm A. His plan was to launch his own investment advisory firm — Embarcadero Capital Advisors, Inc. While still employed at Firm A, however, Defendant Austin took steps to launch his new endeavor.  For example, while still employed at Firm A he emailed his non-public, personal information to his future business partner at Embarcadero.  Yet Exchange Act Rule 10 of Regulation S-P prohibits disclosing nonpublic personal information to a nonaffiliated third party unless certain conditions are met. He also repeatedly employed a strategy for clients of the firm at which he was employed without obtaining the approval of the investment committee. At least one client was put in a position as a result of those actions of holding investments that were contrary to the directives of the client.

Ultimately Firm A learned of Mr. Austin’s action.  He was terminated.  Two days later an employee of Embarcadero filed a registration statement for that firm with the Commission.

Subsequently, Defendants undertook a series of stems to induce clients to join Embarcadero. For example, a series of representations were made to clients and prospective clients about the reasons they should leave Firm A.  The statements were incorrect.  Nevertheless, portions of the misconduct conduct persisted; some of the misrepresentations were ultimately repeated in filings made with the Commission. The Commission’s complaint alleges violations of Advisers Act Sections 206(1), 206(2), and 207.  The complaint is pending. See  Lit. Rel. No. 26395 Sept. 11, 2025.