Michael William Hajeck III of St. Petersburg, Florida, a stockbroker with Genworth and Cetera Financial Services, LLC, was fined $35,000 and suspended for eighteen months by Financial Industry Regulatory Authority (FINRA) from associating with a FINRA member in any and all capacities after consenting to findings that he engaged in undisclosed outside business activities and private securities transactions. Letter of Acceptance, Waiver and Consent, No. 2013037390801 (Jan. 21, 2016).
According to the AWC, from June 2010 through June 2013, Hajek helped clients open and manage self-directed IRA accounts via a CPA firm that him and his spouse operated, called H&H. Hajek was reportedly approved by Genworth to engage in H&H business in 2003, which at the time was described as tax planning and preparation business containing consulting duties. The AWC indicated H&H was revised by Hajek to state CPA tax preparation and accounting, per his outside business activity form submitted to Genworth in 2011.
The AWC reported that at least fifteen of twenty-seven H&H customers were additionally clients of Genworth and Cetera. An estimated $1,800,000 in cash and assets was transferred, via eight of the customers, from their Genworth accounts into the aforementioned self-directed IRA accounts with the assistance of Hajek. Most of Hajek?s customers opened these IRA accounts and invested in securities in such accounts via recommendations from Hajek.
According to the AWC, notwithstanding Cetera instructing Hajek to stop engaging in the aforementioned conduct, Hajeks continued to do so for at least three more months. FINRA found Hajek to have exceeded the scope of Genworth’s permission to engage in H&H outside business, considering the nature of H&H’s business and Hajek’s stated role.
The AWC also reported that Hajek controlled a family corporation, KIS, for four years until such firm’s dissolution in 2014. Hajek reportedly maintained records for the firm, controlled correspondence, and handled other financial matters on the firm’s behalf. Hajek reportedly failed to disclose his involvement with KIS to Genworth/Cetera (and later NFP upon becoming affiliated with such firm), when Hajek was obligated to do so.
The AWC further reported that Hajek was involved with eight additional entities from June 2006 and February 2014, where he had signing and other managerial authority. Hajek reportedly failed to disclose his involvement with these entities to Genworth/Cetera and NFP as well, when Hajek was obligated to provide such written disclosure. FINRA found that Hajek’s conduct was violative of NASD Rules 2110 and 3030, and FINRA Rules 2010 and 3270 in this regard.
Hajek was also found to have engaged in twelve private securities transactions pertaining to customers’ IRAs, involving in excess of $2,300,000 worth of customer funds, between June 2010 and June 2013. The AWC indicated that Hajek’s involvement included structuring transactions and implementing investment and tax planning strategies. Hajek reportedly effected purchases of privately held corporations, promissory notes, and private placements. The AWC indicated that Hajek?s participation in these transactions, which were not executed via Genworth/Cetera, was supposed to have been disclosed in writing to Genworth/Cetera. FINRA found that Hajek’s failure to report his participation was violative of FINRA Rules 2010 and 3040.
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