A former Merrill Lynch advisor has settled SEC charges that he defrauded clients out of nearly $3 million through a non-existent private-equity fund, underscoring the critical need for due diligence in alternative investment strategies.
According to the SEC’s complaint, filed in federal court in Dallas, Rajesh Markan misled 10 clients between 2015 and 2024, raising $2.9 million for what he claimed was a private-equity fund backed by a prominent New York firm. The fund never existed.
Markan, 48, allegedly promised long-term gains and above-market returns, citing a 12-year lockup period and a prestigious external manager to lend credibility. The SEC asserts these claims were entirely fabricated.
In reality, the regulator says Markan misappropriated the majority of investor capital for personal expenses. To maintain the appearance of legitimacy, he allegedly created a fake email domain for the phony fund, issued counterfeit prospectuses, and sent falsified account statements to investors.
The scheme began to unravel in 2024 when one client contacted the PE firm Markan claimed was involved—only to learn there was no affiliation.
The SEC complaint details how Markan used the funds to finance an extravagant lifestyle, including the purchase of a luxury sports car, cosmetic surgery, fertility treatments, and support for a former spouse. He repaid just $640,000 to two investors, while the remaining $2.3 million funded personal expenses and cash withdrawals.
Markan agreed to settle the SEC charges without admitting or denying the allegations. The terms of the agreement are subject to court approval, and any civil penalties or monetary remedies will be decided following a separate motion by the SEC.
On the criminal side, Markan has already pleaded guilty to securities fraud in federal court. His legal counsel did not respond to media inquiries.
Markan’s regulatory history includes a 13-year tenure at Merrill Lynch from 2009 to 2022. According to FINRA’s BrokerCheck, he was permitted to resign over “conduct involving failure to disclose a loan to a client.” He then joined Hilltop Securities, where he remained registered until 2024. That same year, FINRA barred him from the industry after he failed to comply with document requests related to an investigation. Markan neither admitted nor denied FINRA’s findings.
Both Merrill Lynch and Hilltop Securities declined to comment on the case.
For RIAs and wealth managers, this case reinforces the importance of scrutinizing private placement opportunities—particularly when they are offered outside institutional platforms. The use of falsified documents, fictitious affiliations, and fabricated reporting demonstrates how vulnerable even experienced clients can be without advisor transparency and third-party verification.
Advisors should also consider conducting deeper operational due diligence and encouraging clients to validate fund sponsors and custodial relationships directly. As private markets continue to attract more client capital, robust internal compliance protocols and skepticism toward unusually attractive terms remain essential safeguards.
