The U.S. Securities and Exchange Commission (SEC) has accused Titan Global Capital Management
Date: 2023-08-22 Author: Karina Ziganova Categories: BLOCKCHAIN
The US Securities and Exchange Commission (SEC) announced today that it has charged New York-based investment adviser Titan Global Capital Management USA LLC (Titan) with misconduct related to misleading advertising and other compliance violations. This marks the first violation of the SEC's revised marketing rule.
From August 2021 to October 2022, Titan made misleading statements on its website about the hypothetical performance of its investment strategies, including the Titan Crypto strategy, according to an SEC announcement. Titan advertisements predicted "annual" performance results of up to 2,700%. The SEC contends that these advertisements were misleading because they omitted material information, such as suggesting that the strategy's initial three-week effectiveness would continue for a full year.
In addition, Titan violated the Commission's marketing rule by promoting these hypothetical figures without implementing the necessary policies and procedures.
The SEC complaint also revealed several other violations of requirements by Titan. These include controversial disclosures about how Titan handles holding crypto assets for customers, a lack of policies and procedures regarding personal trading of crypto assets by Titan employees, and unauthorized use of customer signatures. However, Titan independently disclosed to the SEC that they did not always obtain customer signatures for specific transactions, resulting in the settlement of those related charges.
Osman Nawaz, head of complex financial instruments at the US Securities and Exchange Commission (SEC), stressed the importance of accurate disclosure, especially when promoting complex strategies. He stated that while the SEC has amended its marketing rule to allow the use of hypothetical performance measures, investment advisors must still adhere to guidelines designed to prevent fraud.
As a result of the SEC's findings, Titan agreed to a settlement without admitting or denying the allegations. The settlement includes a cease and desist order, a censure, an aggregate payment of $192,454 in interest on forfeiture and pending judgment, and a civil penalty of $850,000. The fine will be distributed among affected Titan customers.
The investigation team consisted of Kelly Rock, Elisabeth Gut, Armita Cohen, and Osman Nawaz from the Complex Financial Instruments Department. They were supported by Alexander Lefferts from the Office of Investigation and Market Analysis of the Enforcement Division, and Ling Yu and Carolyn O'Brien from the Forensic Division.
