On August 21, 2023 the SEC announced charges (available here) against a FinTech-focused registered investment adviser (the “Adviser”) alleging the use of misleading hypothetical performance metrics in advertisements.

The SEC alleged that the Adviser, whose client base primarily is comprised of retail investors, provided misleading hypothetical performance results, including by claiming a 2,700% annualized return for its crypto strategy but failing to disclose that the performance was based on a hypothetical account (rather than an actual account) or that the annualized performance was based on a three-week period, and assumed the performance in the three-week period would continue for the entire year.