SEC Charges Fintech Investment Adviser For Misleading Investors
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The US Securities and Exchange Commission (SEC) has filed charges against Titan Global Capital Management USA LLC. The SEC accuses the fintech advisory firm of using misleading hypothetical performance metrics.
SEC charges fintech investment adviser for misleading investors
The charges by the SEC also claim that Titan failed to comply with the set regulatory framework severally. The regulator said that between August 2021 and October 2022, Titan made misleading statements on its website about its performance. At the time, the firm advertised financial results of 2,700% for the Titan Crypto Strategy.
The order also said that the investments made by Titan misled investors as they did not include material information. Furthermore, Titan failed to comply with the marketing rule by advertising hypothetical performance numbers without adopting or implementing the necessary policies and procedures.
The SEC also alleges that Titan disclosed its crypto custody services conflicting. The company also used misleading disclaimer language and failed to adopt the necessary policies and procedures on employee personal trading of crypto assets. The order also claims that Titan self-reported the failure to ensure client signatures were obtained correctly to settle any related charges to the SEC employees.
The Chief of Enforcement’s Complex Financial Instruments Unit, Osman Nawaz, noted, “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 hypothetical performance metrics but only if advisers comply with requirements reasonably designated to prevent fraud.”
The SEC said that Titan cooperated with the regulator in the investigations. The company neither admitted to nor denied the charges. The company has also agreed to a cease-and-desist order, censure, and a $192,454 disgorgement charge. Titan will also pay a $850,000 civil penalty distributed to the affected customers.
SEC cracks down on crypto activities
The latest charges add to the pile of cases that the SEC has launched against the cryptocurrency industry. In February this year, the commission tightened regulatory enforcement for crypto investment advisers. At the time, it also proposed changes to custody rules that might harm crypto firms.
The SEC has also filed charges against some of the largest cryptocurrency exchanges in the country, Binance, and Coinbase. The commission accuses these exchanges of selling unregistered securities. The SEC believes that most crypto assets in the market are securities that need to be under its regulatory purview.
The SEC has also failed to approve any filed Bitcoin spot exchange-traded funds (ETFs). The SEC recently delayed the decision on the Bitcoin ETF applications that Ark Invest and Grayscale filed.
The SEC also filed an appeal on the judge’s decision on the Ripple (XRP) case. A judge ruled that XRP traded on exchanges was not a securities offering. The appeal triggered a drastic drop in XRP prices.
