Titan Global Agrees to Pay $1M Over Misleading Marketing

Charges against fintech advisor were first action under SEC’s amended marketing rule.

LucyBrewster310x310
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Finance Reporter
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Reviewed by: Lisa Barr
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Edited by: Ron Day

Titan Global Capital Management USA, which runs a fintech advisor app, agreed to pay $1.04 million to settle charges that the firm used misleading hypothetical performance metrics in ads.  

New York-based Titan from August 2021 to last October promoted a misleading annualized performance as high as 2,700% for its Titan Crypto strategy on its website, according to an SSEC statement. The firm failed to disclose that the figures were a hypothetical projected performance number from only the strategy’s performance for the first three weeks of the year, the statement said. 

Without admitting or denying the Securities and Exchange Commission’s findings, the firm consented to the entry of the regulator’s order and agreed to pay an $850,000 civil penalty in addition to $192,454 in disgorgement. The charges are the first action from the agency’s new marketing rule, which was amended December 2020 to more closely regulate the marketing of financial advisors.  

As more traditional finance firms move into cryptocurrency asset management, the SEC is attempting to keep pace with scrutinizing the notoriously fraudulent industry. The regulator started probing investment advisors, including Titan, about their practices relating to crypto assets last year, Reuters reported earlier this year. The investigation into how advisors were handling digital assets picked up steam amid the infamous fallout of crypto exchange FTX at the end of last year.   

“Titan’s advertisements and disclosures painted a misleading picture of certain strategies for investors,” said Osman Nawaz, chief of the SEC’s Enforcement’s Complex Financial Instruments Unit in a statement. “This action serves as a warning for all advisers to ensure compliance.” 

"Although Titan reached a settlement with the SEC, Titan neither admits nor denies any wrongdoing," the company said in a statement in response to the SEC charges.

SEC Charges Titan With Compliance Failures 

The agency also charged Titan with three compliance failures. The firm reportedly made conflicting disclosures to clients about how Titan securely stored crypto assets, misled users with improper hedge clauses in client advisory agreements, and failed to adopt proper employee personal trading rules concerning crypto assets.  

Titan is a registered investment advisor with the SEC and operates through a mobile trading app. Yet unlike other investment apps that aim to help beginners invest in stocks and bonds, the company’s thesis is to help retail investor gain access to investing strategies and alternative investments that are used by the ultra-wealthy.  

While the app does offer traditional portfolios, it also gives users opportunities to invest in private equity, cryptocurrency, startups and venture capital.  

 

Contact Lucy Brewster at [email protected] 

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.