FINRA Charges Huntington Stockbroker With Selling Away
William Joseph Kielczewski of Toledo Ohio a stockbroker formerly registered with The Huntington Investment Company has been charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement in a Complaint alleging that (1) Kielczewski partook in private securities transactions without notifying the firm beforehand and (2) Kielczewski falsified information to the firm concerning the private securities transactions. Department of Enforcement v. William Joseph Kielczewski Disciplinary Proceeding No. 2017054405401 (May 21, 2019).
According to the Compliant, a hedge fund, Mariemont Capital Partners L.P., was created by Kielczewski in January of 2014 for investing and trading of residential mortgage backed securities pools. Supposedly, the private offering memorandum for Mariemont L.P. conveyed that only accredited investors could purchase limited partnership interests in the Fund. By June 15, 2017, forty-one investors allegedly purchased a total of $53,400,000.00 in limited partnership interests. Supposedly, a company created and owned by Kielczewski, MC LLC, was the Fund’s investment manager; it effected all of the Fund’s investment transactions.
The Complaint stated that when Kielczewski created Mariemont L.P., Kielczewski notified The Huntington Investment Company’s supervisory personnel, including a Chief Compliance Officer, that he was only involved with Mariemont Capital as a passive owner. Allegedly, in 2015 and in 2016, when Kielczewski completed compliance attestations, he made further representations to the firm about his passive ownership status. Moreover, Kielczewski allegedly told his supervisor at this time that there was no solicitation of investments made by him regarding Mariemont investments. FINRA Department of Enforcement alleged that Kielczewski lied in this regard.
Particularly, the Complaint stated that Mariemont L.P was marketed by Kielczewski on a consistent basis to prospective investors while he was associated with Huntington Investment Company. Allegedly, in e-mail correspondence, Kielczewski bragged about the performance of Mariemont L.P, and he steered prospective investors towards purchasing the investments. FINRA also indicated that prospective investors met with Kielczewski about making investments. Then, customers’ investment purchases were allegedly facilitated by Kielczewski.
The Complaint also stated that Kielczewski instructed another MC LLC co-founder – a prior stockbroker who ran an MBS trading desk – to effect securities transactions for Mariemont L.P. Additionally, FINRA indicated that Kielczewski’s tax documents showed that he was MC LLC’s general partner between approximately 2014 and 2016. Ultimately, FINRA alleged that Kielczewski was not simply a passive investor in Mariemont L.P. – he was actively involved. FINRA Department of Enforcement alleged that Kielczewski’s false statements to The Huntington Investment Company in this regard was violative of FINRA Rule 2010.
The Complaint also stated that from January of 2014 and June of 2016, a total of $10,000,000.00 worth of securities transactions had been arranged between Kielczewski and four of the firm’s customers; however, these transactions were effected outside the firm’s auspices. Allegedly, in one case, liquidations of securities positions were effected by Kielczewski in the accounts of customers WI and RI to facilitate a purchase of $303,841.39 in Mariemont L.P. The Complaint alleged that Kielczewski also aided investor SC in buying $6,000,000.00 worth of Mariemont L.P. Further, customers KK and KR were allegedly advised by Kielczewski to purchase the limited partnership interests, and assisted by Kielczewski in making a $4,000,000.00 investment. Supposedly, Kielczewski’s involvement in these transactions had never been made known to The Huntington Investment Company contrary to the firm’s policies. Consequently, FINRA Department of Enforcement alleged Kielczewski’s conduct was violative of FINRA Rules 2010 and 3280.
FINRA Public Disclosure reveals that Kielczewski was discharged by The Huntington Investment Company on April 26, 2017 based upon allegations of Kielczewski’s private securities transactions and his misrepresentations pertaining to outside business activities.