The SEC has charged Titan Global Capital Management, described as a “Fintech investment advisor,” with touting hypothetical performance that was misleading.
Titan has settled the allegations without admitting or denying the SEC’s claims. The firm has paid a small penalty of $192,454 in disgorgement as well as a civil penalty of $850,000. The penalty will be distributed to “affected clients,” according to the SEC.
The SEC’s allegations state that from August 2021 to October 2o22, Titen “made misleading statements on its website regarding hypothetical performance, including by advertising “annualized” performance results as high as 2,700 percent for its Titan Crypto strategy.”
The SEC’s claim says it was misleading because Titan failed to include “material information” and that projections anticipated that the promoted strategy’s performance in the first 3 weeks would continue.
As well, the SEC further finds that Titan made conflicting disclosures to clients about custody of crypto and gave the false impression that clients had “waived non-waivable causes of action against Titan.”
Titan was alleged to also have failed to adopt policies concerning employee training in crypto.
The SEC’s order also states that Titan self-reported to the SEC staff that it failed to ensure that client signatures were obtained for certain types of transactions in client accounts and agreed to settle related charges.
Osman Nawaz, Chief of Enforcement’s Complex Financial Instruments Unit, said that when marketing complex strategies investment advisors must ensure accuracy in disclosures.
“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 of its strategies for investors. This action serves as a warning for all advisers to ensure compliance.”
Titan’s website states that its mission is to “reimagine investing” and to set a “new standard in investment management.” Titan is an is an investment adviser registered with the SEC. Its home page currently promotes a bank savings account competitor with interest rates of up to 5.82%.