The SEC fines a FinTech adviser Titan with $1m for misleading clients with false advertising.
Titan Global Capital Management USA LLC, a FinTech investment adviser, is to pay $1,051,052 to settle charges from the Securities and Exchange Commission (SEC).
The company was charged for using hypothetical performance metrics in misleading advertisements, as well as compliance issues.
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According to SEC’s press release, the company made misleading statements on its website about hypothetical returns, encompassing the period ranging from August 2021 to October 2022.
This includes an advertisement of Titan Crypto strategy that promised annualized performance results could go as high as 2,700%, without including the information that this projection is based on a hypothetical three-week period.
As explained in the press release, Titan violated SEC’s marketing rule, which was amended in December 2020. According to the rule, advisers can, in fact, use hypothetical metrics, but it has to comply with required procedures designed to prevent fraud.
Osman Nawaz, Chief of Enforcement’s Complex Financial Instruments Unit, added:
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 cooperated with the SEC and agreed to pay an $850,000 civil penalty and $192,454 in interest.
Worth noting that despite agreeing to the payments, a cease-and-desist order and a censure, Titan neither admits nor denies any wrongdoing. In its own statement, the company stated that “the SEC Order acknowledges Titan’s cooperation and remedial efforts since July 2022. <...> Titan continues to make significant investments to build and enhance its compliance program.”
The SEC seems to be cracking down on crypto-related businesses, as evident by its ongoing legal chess match with Gemini or the tug-of-war with Ripple Labs.
