The investment lawyers of Gana Weinstein LLP are investigating a series of regulatory complaints (see FINRA No. 2013037390801) brought by the Financial Industry Regulatory Authority (FINRA) against Jason Sayles (Sayles), Michael Hajek (Hajek), and Karen Hajek of St. Petersburg, Florida. According to FINRA the three operated out of Hajek CPA business Hajek & Hajek. FINRA found that the brokers exceeded the scope of their brokerage firms’ approval to conduct the CPA business by assisting customers to open and administer self-directed IRAs away from the firms. The brokers were also accused of recommending and facilitating customers’ investments to transfer a total of nearly $1.8 million in cash and assets from their firm accounts to their self-directed IRA accounts. In total FINRA found that the brokers participated in private securities transactions in the self-directed IRA accounts totaling more than $2.3 million away from their firms.
According to FINRA records the brokers were associated with Genworth Financial Securities Corporation (Genworth) and Cetera Financial Specialists LLC (Cetera). Hajek resigned from Cetera in June 2013 while the firm investigated the self-directed IRAs. At that time FINRA found that Hajek continued to engage in this business even after Cetera directed him to cease his activity. Thereafter, the brokers became registered with NFP Securities, Inc. (NFP) until February 2014. NFP terminated Hajek claiming that the broker conducted activities outside of the firm.
The conduct allegedly engaged in by the brokers is also referred to as “selling away” in the industry. In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.