- Titan Global Capital Management has settled with the SEC for $1 million and is closing down
- The SEC’s investigation covered a period from August 2021 to October 2022 and found issues with Titan’s disclosures and adherence to regulations.
- The New York-based FinTech firm’s settlement includes repayment to clients and a civil penalty of $850,000
Titan Global Capital Management has agreed to pay a $1 million settlement to the Securities and Exchange Commission (SEC) and cease operations after an investigation into its cryptocurrency strategy operation. The SEC charged the New York-based FinTech investment advisory company with deceptive practices, including misleading hypothetical performance metrics in advertisements and various compliance shortcomings. Titan, which provides strategies to retail investors through its mobile trading app, allegedly advertised exaggerated “annualized” performance results of up to 2,700% but will now have to repay its clients as well a penalty.
Titan Lied Over Potential Gains
Titan offered its crypto strategy service between August 2021 and October 2022, with the SEC finding that its advertisements omitted crucial information, including the assumption that early performance would persist throughout the year. Moreover, Titan is accused of violating the marketing rule by not adhering to the required policies and procedures outlined by the Commission’s amended marketing rule of December 2020.
As well as false advertising, the SEC’s investigation revealed additional compliance issues within Titan. The company reportedly provided conflicting information about the custody of clients’ crypto assets, included misleading liability disclaimer language in client agreements, and failed to adopt necessary policies and procedures related to employee personal trading in crypto assets.
While cooperating with the SEC’s investigation, Titan agreed to the entry of the order, finding it violated the Advisers Act. The settlement terms include a cease-and-desist order, censure, and financial penalties.
Play by the Rules, Says SEC
Osman Nawaz, Chief of Enforcement’s Complex Financial Instruments Unit, said in a statement that those offering such services must play by the rules:
When offering and marketing complex strategies, investment advisers must ensure the accuracy of disclosures made to existing and prospective investors. 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 will pay $192,454 in disgorgement, prejudgment interest, and a civil penalty of $850,000, which will be distributed to affected clients.
