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Global: SEC Takes Action Against Fintech Investment Adviser for Violating Marketing Rule

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The SEC
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The Securities and Exchange Commission (SEC) has brought charges against fintech investment adviser Titan Global Capital Management USA, alleging that the company misled investors through advertisements containing inaccurate performance metrics.

In a landmark case involving the SEC’s revised marketing rule, Titan Global Capital Management USA has opted to settle the charges by paying more than $1 million, without admitting or denying the allegations.

The SEC states that between August 2021 and October 2022, Titan, which offers various intricate strategies to retail investors via its mobile trading app, published deceptive statements on its website concerning hypothetical performance. These statements included showcasing “annualised” performance figures as high as 2,700% for its crypto strategy.

The SEC contends that these advertisements were misleading due to the omission of crucial information. For instance, the hypothetical performance projections were based on the assumption that the strategy’s performance during its initial three weeks would persist throughout an entire year.

The order further reveals that Titan provided conflicting information to clients about how it managed crypto assets.

Osman Nawaz, Chief of Enforcement’s Complex Financial Instruments Unit at the SEC, commented, “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.”

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