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Fintech investment advisor Titan slapped with $1M fine over misleading ads

Fintech investment advisor Titan Global Capital Management promised investors annual returns of over 2,700% with its digital asset product, in marketing that the U.S. Securities and Exchange Commission (SEC) found to be misleading. The firm has agreed to pay more than $1 million to those it advised, without admitting fault.

On Monday, New York Fintech firm Titan Global Capital Management agreed to pay the U.S. SEC more than $1 million in fines after the financial markets regulator charged it with misleading investors over its digital asset product.

Titan is a New York-based FinTech investment adviser that offers multiple strategies to retail investors through its mobile trading app, including the digital asset-based strategies that landed the firm in hot water with the SEC.

According to the SEC’s cease-and-desist order, between August 2021 and October 2022, the firm made misleading statements on its website regarding hypothetical performance, including by advertising annualized performance results as outlandish as 2,700% for its “Titan Crypto strategy.”

In a statement, the SEC said Titan’s advertisements were “misleading because they failed to include material information, for example, that the hypothetical performance projections assumed that the strategy’s performance in its first three weeks would continue for an entire year.”

The regulator’s order also found that Titan violated the SEC marketing rule by advertising hypothetical performance metrics without having adopted and implemented required policies and procedures; made conflicting disclosures to clients about how it custodied digital assets; and, contrary to what the company said, failed to adopt policies and procedures concerning employee personal trading in digital assets.

“When offering and marketing complex strategies, investment advisers must ensure the accuracy of disclosures made to existing and prospective investors,” said Osman Nawaz, Chief of Enforcement’s Complex Financial Instruments Unit. “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.”

The regulator said that Titan had cooperated with the investigation and consented to the SEC’s order finding that it violated the Advisers Act—the federal law that regulates investment advisers by requiring registration and imposing fiduciary duties to act in the best interests of clients.

Without admitting or denying the SEC’s findings, the Fintech investment advisor agreed to a cease-and-desist order, a censure, and to pay $192,454 in disgorgement, prejudgment interest, and an $850,000 civil penalty to be distributed to affected clients.

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