The SEC has announced penalties and sanctions against former investment adviser Mass Ave Global Inc. and its co-founder and CEO, Winston M. Feng, who is charged with making false and misleading statements to investors in the firm’s flagship opportunity fund.
In an announcement Wednesday, the SEC said MassAve will pay a civil penalty of $350,000, while Feng will pay $250,000 to settle the charges. Additionally, Feng has been suspended for 12 months from industry-related activities.
The federal regulator said that between 2020 and 2022, MassAve, a New York City-headquartered firm focusing on Asia-related investments and managing over $1 billion in regulatory assets, made a series of materially false statements regarding the holdings and exposures of its flagship opportunity fund, which has substantial investments in China.
According to the SEC, Feng doctored underlying the portfolio data for the fund, which were then included in investor communications including monthly tear sheets and summary portfolio snapshots.
The SEC also noted that from late 2022 to early 2023, MassAve failed to disclose a conflict of interest due to its other co-founder operating a separate hedge fund in China. Beyond that, the SEC found that the firm's compliance policies and procedures were inadequate.
"Complete and accurate reporting at all turns, whether in investor communications or about conflicts of interest, is vital to investor protection," said Osman Nawaz, chief of the SEC Enforcement Division's Complex Financial Instruments Unit. "We will continue to hold individuals accountable for falling short in making such disclosures."
In January 2023, MassAve informed investors that its communications regarding the flagship fund were inaccurate and lacked proper disclosures. That sparked a flood of redemption requests, and the firm has since been winding down its operations.
The SEC’s orders concluded that MassAve violated the antifraud and compliance provisions of the Investment Advisers Act of 1940, while Feng violated the antifraud provisions of the same act.
Without admitting or denying the SEC's findings, both MassAve and Feng consented to the entry of the SEC’s orders, agreeing to cease and desist from further violations, and to the penalties specified.
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