Rajesh Markan, a former private equity broker previously employed by Merrill Lynch and Hilltop Securities, consented to a final judgment by the SEC for his role in a 10-year scheme that solicited approximately $2.7m from 10 clients, ostensibly to be invested in a fund that ended up being entirely fictitious.

The SEC permanently barred Markan from securities-related activities. Monetary remedies, disgorgement, and pre-judgment interest. A civil penalty will be determined by the court in a future SEC motion.

From 2015 to July 2025, Markan promised investors that the funds they entrusted to him would be invested in Bain Capital private equity offerings, and that their contributions would need to be locked up for six to 12 years before they could withdraw them, a timeframe not unusual for the industry.  

To perfect the illusion, Markan provided investors with a false prospectus, fabricated emails from purported investment officers, and provided false statements indicating the growth of their investments, the SEC stated.

Stole investor contributions

That duplicity allowed him to cover for what was essentially naked exploitation. Markan stole the investors’ contributions and spent it on lavish purchases, with “at least one” instance of a Ponzi-like payment to an earlier investor.

But the scheme fell short of a full-blown Ponzi scheme. Throughout, Markan only repaid two investors in the sum of nearly $640,000 and pocketed the rest of the money.  

Markan worked at Merril Lynch during the bulk of the fraud, from 2009 to 2022, when he was dismissed for “failing to disclose a loan from a client.”

According to KlaymanToskes, a law firm representing clients in FINRA arbitration claims against Markan and Merrill Lynch, Markan often acted outside of approved communications channels to discuss investment opportunities with clients, including over email and text message.

One of those claims seeks $500,000 in damages. The investors contend that Merrill failed to intervene when red flags and customer complaints were raised about Markan’s conduct.

Markan was barred by FINRA from associating with any member firm on October 1, 2024, after he refused cooperation.

In June, he pleaded guilty to one count of criminal securities fraud in Texas federal court and consented to parallel civil charges from the SEC. Criminal sentencing is forthcoming.