A securities broker charged by the Securities and Exchange Commission with millions of dollars in securities fraud worked for the same Dallas firm that had $15 million in SEC penalties and fines and still managed to win the contract in charge of Oklahoma’s billions of dollars in Winter Storm Uri bonds.
An SEC complaint alleged Rajesh Markan, who is a former Merrill Lynch broker who ended up going to work for Hilltop Securities in Dallas in 2022, defrauded clients through a fictitious private equity investment scheme that lasted nearly 10 years, reported Investment News a few months ago.
The SEC claims Markan solicited nearly $2.9 million for an investment he named the “Intrinsic Value Portfolio” and claimed it was advised by a New York-based private equity firm. He reportedly promised above-market returns for investors who were willing to lock up their capital for up to 12 years.
But here’s the problem. The SEC stated no such fund ever existed and instead Markan “misappropriated most of the funds for personal use and fabricated a paper trail—including faked client statements…”
“None of these representations were true: 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,” the SEC said in a release Friday.
Markan worked for Merril Lynch until 2022 when he joined Hilltop Securities in Dallas. He left Hilltop in August.
When the Oklahoma legislature hurriedly approved a winter storm securitization program to pave the way for major utilities to put their 2021 storm costs onto the backs of ratepayers and customers for up to 25 years, Hilltop ended up with the winning bid. The storm costs, through the use of bonds, ended up into the billions of dollars.
OK Energy Today reported in 2022 that Hilltop had a history of SEC fines and penalties totaling more than $15 million. Markan joined the firm in 2022.
Hilltop Securities, the firm chosen by the Oklahoma Development Finance Authority, won the contract in 2021 and the contract was signed June 30, 2021, just 10 days before the firm was fined $85,000 by the SEC and ordered to disgorge $206,606 in profits.
Documents maintained by FINRA, the Financial industry Regulatory Authority, showed Hilltop’s record of 54 separate cases of censure, fines, penalties, orders of cease and desist, injunctions and disgorgements. In all, they totaled $15,396,294. The largest shown in the FINRA records was a $10 million fine by the SEC. Disgorgements are orders for a firm such as Hilltop to give up any profits they made as a result of the alleged wrongful conduct or action.