The Securities and Exchange Commission has charged fintech investment adviser Titan Global Capital Management USA with misleading investors through advertisements related to performance metrics.
In a landmark case concerning the SEC’s amended marketing rule, Titan has agreed to pay over $1 million to settle the charges without admitting or denying the findings.
Between August 2021 and October 2022, Titan, which offers various complex strategies to retail investors via its mobile trading app, published misleading statements on its website regarding hypothetical performance. This included advertising annualized performance results as high as 2,700% for its crypto strategy.
The SEC indicated that the advertisements were deceptive because they did not provide critical information, such as the assumption that the strategy’s performance in its first three weeks would persist for an entire year.
Additionally, the order revealed that Titan provided conflicting disclosures to clients concerning the custody of crypto assets.
Osman Nawaz, chief of the enforcement’s complex financial instruments unit at the SEC, stated, “The Commission amended the marketing rule to allow for the use of hypothetical performance metrics but only if advisers comply with requirements reasonably designed to prevent fraud. Titan’s advertisements and disclosures painted a misleading picture of certain strategies for investors. This action serves as a warning for all advisers to ensure compliance.”