The U.S. Securities and Exchange Commission (SEC) announced charges against Titan Global Capital Management USA LLC, a New York-based fintech investment adviser, alleging misleading use of hypothetical performance metrics in advertising.。

The SEC also accused Titan of multiple compliance failures that led to misleading disclosures about the custody of client crypto assets, improper use of "hedging clauses" in client agreements, unauthorized use of client signatures, and failure to adopt policies regarding employee crypto asset transactions.。

According to the SEC's order, between August 2021 and October 2022, Titan, which offers multiple sophisticated strategies to retail investors through its mobile trading app, made misleading statements on its website about hypothetical performance, including by promoting "annualized" performance results of its Titan Crypto strategy of up to 2,700%.。

The order charged that Titan's ads were misleading because they did not contain material information, such as hypothetical performance projections that assumed the strategy's performance over the first three weeks would last a full year.。

The order also found that Titan violated the marketing rules by not adopting and implementing the required policies and procedures when it advertised hypothetical performance indicators and by not taking other steps required by the Commission's marketing rules, which were revised in December 2020.。

The SEC's order further found that Titan (1) disclosed conflicting information to clients regarding how Titan held crypto assets; (2) included disclaimer language in its client advisory agreement, creating the false impression that the client had waived its non-renounceable cause of action against Titan; and (3), contrary to the statement, failed to adopt policies and procedures regarding employees "personal crypto asset transactions.。

The order also states that Titan reported to SEC staff that it failed to ensure that certain types of transactions in customer accounts were signed by customers and agreed to settle the related fees.。

Titan cooperated with the investigation and agreed with the SEC's finding that he violated the Advisers Act.。Without admitting or denying the SEC's findings, Titan agreed to issue a cease-and-desist order, censure, and pay $192,454 in illegal gains, pre-judgment interest, and $850,000 in civil penalties that will be distributed to affected customers.。