Former Financial Advisor Rajesh Markan Sanctioned by the SEC

• July 29, 2025
• Hilltop Securities

Rajesh Markan (CRD#: 4553309) was a previously registered broker and investment advisor.

Broker’s History

He entered the securities industry in 2002 and previously worked with IDS Life Insurance Company; Ameriprise Financial Services, Inc.; Citigroup Global Markets, Inc.; Merril Lynch, Pierce, Fenner & Smith Incorporated; and Hilltop Securities, Inc.

Current and Past Allegations of Misconduct Leading to Investment Loss

According to publicly available records released by U.S Securities and Exchange Commission (SEC), in July 2025, the Securities and Exchange Commission (“Commission”) deemed it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Rajesh Markan (“Markan” or “Respondent”). In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept.

The Commission finds that on July 9, 2025, a final judgment was entered by consent against Markan, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, as set forth in the judgment entered in the civil action entitled SEC v. Rajesh Markan, Civil Action Number [3:25-cv-01653], in the United States District Court for the Northern District of Texas, Fort Worth Division. The Commission’s complaint alleged that Markan made false and misleading statements and engaged in a fraudulent scheme to deceive in connection with the offer and sale of securities while working as a registered representative and investment adviser representative of two dually registered broker-dealers and investment advisers. Markan solicited approximately 10 of his brokerage customers from three separate states to invest, collectively, approximately $2.9 million in a purported private equity fund. Markan falsely told the investors that a well-known New York private equity firm advised the fund and provided investors a sham prospectus to describe the offering. In reality, the fund did not exist, the fund was not associated with the New York private equity firm, and Markan misappropriated most of the investors’ money. On or about March 31, 2025, Markan entered into a written plea agreement to plead guilty to a single count of securities fraud in violation of Title 15 of the United States Code, Sections 77q(a) and 77x before the United States District Court for the Northern District of Texas, in United States v. Rajesh Markan, Crim. No. 3:25-CR-145-N

As a result, Rajesh Markan was permanently barred from associating with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or NRSRO, as well as from participating in any offering of a penny stock.

In addition, Rajesh Markan has been the subject of twelve other SEC Disclosures, including:

• June 2025—“ Plaintiff SEC for its complaint against Defendant Rajesh Markan alleges that from at least 2015 through July 2024, Markan, while working as a registered representative of two dually-registered broker-dealers and investment advisers, solicited approximately ten of his brokerage customers to invest, collectively, approximately $2.9 million in a purported private equity fund. Markan told the investors that a well-known New York private equity firm (“PE Firm”) advised the fund. Markan called the fund “Intrinsic Value Portfolio” and circulated a prospectus to describe the offering. Because 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. None of these representations were true. The fund was fake and never existed, there was no association with the PE Firm, and Markan misappropriated most of the investors’ money for himself. Markan also lulled investors by sending fabricated statements of their purported account balances and created a fake domain name so he could send emails as a purported PE Firm representative. Only in 2024, when certain investors reached out to the PE Firm, did most of the investors discover Markan’s scheme. By that point, Markan had already spent most of the investors’ funds on personal expenses. By engaging in the foregoing activities, Defendant violated the antifraud provisions of the federal securities laws, namely Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933 (“Securities Act”).”
• February 2025– “Clients allege that they were solicited by their Financial Advisor to invest in an outside investment that was fraudulent. They also allege misappropriation of funds.” The damage amount requested is $500,000.00 and the customer dispute is still pending.
• November 2024—“ Client alleges that she was solicited by her Financial Advisor to invest in an outside investment that was fraudulent. She also alleges misappropriation of funds.” The damage amount requested is $300,000 and the customer dispute is still pending.
• November 2024—“ Client alleges that he was solicited by his Financial Advisor to invest in an outside investment that was fraudulent. He also alleges misappropriation of funds.” The damage amount requested is $500,000.00 and the customer dispute is still pending.
• October 2024—“ Client alleges failure to invest funds in October 2021.” The customer dispute settled for $33,119.30.
• October 2024—“ Clients allege that they were solicited by their Financial Advisor to invest in an outside investment that was fraudulent. They also allege misappropriation of funds.” The damage amount requested is $1,000,000 and the customer dispute is still pending.
• September 2024—“ Client alleges that she was solicited by her financial advisor to invest in an outside investment that was fraudulent.” The damage amount requested is $200,000 and the customer dispute is still pending.
• September 2024—“ Allegations that representative created a bogus hedge fund, bogus prospectuses and other materials to share with Claimants to solicit fraudulent investment.” The damage amount requested is $420,000 and the customer dispute is still pending.
• August 2024—“ Clients allege that they were solicited by their financial advisor to invest in an outside investment that was fraudulent.” The damage amount requested is $200,000 and the customer dispute is still pending.
• October 2022—Voluntary Resignation from Merrill Lynch, Pierce, Fenner & Smith Incorporated for, “Conduct involving failure to disclose a loan to a client.”

For a copy of Rajesh Markan’s SEC AdvisorInfo, click here.

We Help Investors Recover Investment Losses

FINRA Rule 2150 specifically addresses theft and conversion in a customer account, stating “no member or person associated with a member shall make improper use of a customer’s securities or funds.”  This rule includes any “guarantee” that brokers make to customers in relation to losses incurred in a brokerage account.

 

In addition, FINRA Rule 3240 strictly prohibits a financial advisor from borrowing money from a client absent from unique circumstances, such as a familial relationship between the Financial Advisor and the client.  There is also an exception if the client is a financial institution regularly engaged in the business of lending.  The reason for this prohibition is clear—borrowing money from clients creates an immediate conflict of interest and can potentially lead to theft or conversion of client assets.

 

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.

Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.

FINRA regulations require that a customer’s written authorization is required before a broker-dealer can carry out transactions in the customer’s account. In addition, the broker-dealer’s member firm needs to approve the broker-dealer’s authorization. These measures are intended to protect the customer. Discretionary trading allows the broker-dealer to unilaterally decide to buy or sell securities at any price and not have to check with the client first. Exercising discretion without authorization can be costly to investors, and broker-dealers and their member firms, too.

Excessive trading often occurs when a Financial Advisor puts his or her interests ahead of the clients and makes transactions solely for the purpose of generating commissions. Financial Advisors have a regulatory duty to recommend suitable investment strategies. One of the components of the suitability analysis is quantitative suitability.

Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation. Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.