Financial Advisor Rajesh Markan Barred by FINRA

• November 8, 2024
• 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 the Financial Industry Regulatory Authority (FINRA), in October of 2024, without admitting or denying the findings, Markan consented to the sanction and to the entry of findings that he refused to provide documents and information requested by FINRA as a part of its investigation into the circumstances giving rise to a Form U5 filed by his member firm. The findings stated that the Form U5 disclosed that Markan was under internal review at the firm for fraud or wrongful taking of property, or violating investment-related statutes, regulations, rules or industry standards of conduct. As a result, Respondent also consented to the imposition of the following sanctions: a bar from associating with any FINRA member in all capacities.

For a copy of the FINRA Disciplinary Action Details, click here.

In addition, Rajesh Markan has been the subject of five other FINRA disclosures, which include:

• 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 FINRA BrokerCheck, 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.

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.