The Securities and Exchange Commission has reached a settlement with a former registered representative accused of defrauding his customers, Advisor Hub reports.
Rajesh Markan, a former broker with Merrill Lynch and Hilltop Securities, was charged by the SEC with violating the antifraud provisions of the federal securities laws during a period spanning at least 2015 through July 2024.
According to a complaint filed in U.S. District Court for the Northern District of Texas, Markan solicited about ten of his brokerage customers to invest a total of about $2.9 million in a purported private equity fund. The SEC alleges that Markan told the investors that a well-known New York private equity firm advised the fund, which Markan called “Intrinsic Value Portfolio.”
“The complaint alleges that because Markan claimed it was a private equity investment, Markan told investors that their money would be tied up for six to twelve years, but he assured them that, ultimately, they could expect to make above-market returns,” the SEC stated. But the commission alleges that the fund was fake and never existed, there was no association with the New York private equity firm, and Markan misappropriated most of the investors’ money for himself.
He allegedly sent fabricated statements to investors purporting to show their account balances and created a fake domain name so he could send emails as a purported employee of the New York private equity firm. The SEC states that Markan repaid about $640,000 to two investors, but spent the remaining $2.3 million to fund a lavish lifestyle, including the purchase of a luxury sports car, daily living expenses for himself and a former spouse, dining, shopping, entertainment, in vitro fertilization treatments, elective surgery, credit card bills and cash withdrawals.
Markan did not admit or deny the allegations, but agreed to the entry of a judgment permanently enjoining him from future violations of the antifraud provisions. He will also have to pay financial penalties, including disgorgement, prejudgment interest, and a civil penalty that will be determined by a federal judge upon a future motion by the SEC.
Markan also pleaded guilty to parallel criminal charges in the same court and faces up to five years in prison. He was barred from the financial industry by FINRA in October 2024. Markan voluntarily resigned from Merrill Lynch in 2022. The firm said that he had “failed to disclose a loan from a client,” according to his BrokerCheck record.
The attorneys at Hyman Cotter PC were formerly senior attorneys in the SEC’s Division of Enforcement. We have represented clients in regulatory matters while working at Morgan Stanley and in private practice at some of the world’s largest law firms. Therefore, we understand the complexities that come with being the subject of a regulatory inquiry, and we have the experience to guide and advise you through any type of regulatory investigation. If you are the subject of a regulatory proceeding, contact Hyman Cotter PC at 312-291-4600 or through our online contact form for a free consultation.
