SEC Charges Titan Global Management for Misleading Claims

The Securities and Exchange Commission (SEC) has taken action against New York-based fintech investment adviser, Titan Global Management.

The SEC's charges stem from various securities violations, including matters related to the custody of cryptocurrency.

One significant allegation is that Titan Global Management employed misleading hypothetical performance metrics in its advertisements, violating the amended marketing rule by the SEC.

What are Hypothetical Performance Metrics?

"Hypothetical performance metrics" are essentially projected or imaginary figures that showcase how an investment might have performed under certain conditions.

They're like a 'what-if' scenario.

In this case, Titan Global Management used these numbers in their advertisements to suggest that their investment strategy, especially related to cryptocurrency, had incredibly high returns.

These misleading metrics featured purported "annualised" performance results reaching a staggering 2,700% for its Titan Crypto strategy, as indicated by an official statement from the SEC.

In addition, the SEC claims that Titan failed to provide accurate and adequate information about how the firm handled crypto assets under its custody.

The company is accused of neglecting to establish proper policies and procedures concerning its employees' personal trading activities involving crypto assets.

Osman Nawaz, Chief of the SEC's Enforcement's Complex Financial Instruments Unit emphasised that this enforcement action should serve as a cautionary example for all investment advisers to prioritise compliance.

He remarked:

"Titan's advertisements and disclosures painted a misleading picture of certain of its strategies for investors."

Titan Global Management chose to collaborate with the SEC during the investigative process and has agreed to a cease-and-desist order.

As part of the resolution, the firm has committed to paying more than $192,000 in disgorgement.

Furthermore, a civil penalty of $850,000 will be imposed, with the funds directed towards compensating affected customers.