SEC fines robo-advisor $1M in first case under new marketing rule

The distinction of becoming the first advisory firm to run afoul of the SEC’s new marketing rule will cost robo-advisor Titan Global Capital Management more than $1 million.

According to an SEC order dated Aug. 21, the New York-based fintech firm used misleading metrics in its advertising from August 2021 to October 2022. Titan made statements on its website regarding hypothetical investment gains , including the promotion of annualized performance results as high as 2,700% for its Titan Crypto strategy, according to SEC charging documents.

But investigators said Titan’s advertisements failed to include material information. For example, the hypothetical performance projections assumed that the strategy’s performance in its first three weeks would continue for an entire year.

The SEC order also found that Titan violated the marketing rule by advertising the metrics without adopting or implementing required policies and procedures, “or taking other steps required by the Commission’s marketing rule, which was amended in December 2020.” The rule officially took effect on May 4, 2021, but then advisors received 18 months to come into compliance no later than Nov. 4, 2022.

The SEC further alleged that Titan made conflicting disclosures to clients about how Titan custodied crypto assets; included liability disclaimer language in its client advisory agreements that created the false impression that clients had waived non-waivable causes of action against Titan; and failed to adopt policies and procedures concerning employee personal trading in crypto assets.

Titan self-reported to the SEC staff that it failed to ensure that client signatures were obtained for certain types of transactions in client accounts, and agreed to settle related charges, the settlement order shows.

(This news/press release has not been altered by, apart from the headline, and has been obtained from a syndicated source:-