SEC settles charges against an investment advisor for false, misleading statements

The Securities and Exchange Commission settled charges against investment advisory firm, Mass Ave Global.

The proceedings against Mass Ave Global and its co-founder and CEO Winston M. Feng were for making false and misleading statements to investors in Mass Ave’s flagship opportunity fund.

According to the SEC’s orders, from 2020 to 2022, the New York City-based investment adviser that made Asia-focused investments made a series of materially false and misleading statements about its flagship opportunity fund’s holdings and exposures.

The orders found that some of the false statements were the result of modifications Feng made to underlying portfolio data. That data was then included in Mass Ave’s investor communications, such as its monthly tear sheets, summary portfolio snapshots, and top 10 position lists

Further, according to the SEC’s orders, from late 2022 to early 2023, Mass Ave did not report to its investors a conflict of interest that sprang from Mass Ave’s other co-founder operating a separate hedge fund in China. In addition, the SEC found failures in the firm’s compliance policies and procedures.

“Complete and accurate reporting at all turns, whether in investor communications or about conflicts of interest, is vital to investor protection,” Osman Nawaz, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit, said. “We will continue to hold individuals accountable for falling short in making such disclosures.”

The SEC found that in January 2023, Mass Ave reported to investors that its communications about the flagship fund were inaccurate and did not contain appropriate disclosures. Soon thereafter, Mass Ave received a wave of redemption requests and has since been winding down operations.

The SEC’s orders found that Mass Ave violated the antifraud and compliance provisions of the Investment Advisers Act of 1940, while Feng violated the antifraud provisions the act. Without admitting or denying the SEC’s findings, Mass Ave and Feng consented to the entry of the SEC’s orders requiring them to cease and desist from further violations.

To settle the SEC’s charges, Mass Ave agreed to pay a civil penalty of $350,000, and Feng agreed to pay a civil penalty of $250,000. In addition, Feng, who is also the chief investment officer and portfolio manager at Mass Ave, is suspended for 12 months from working in the industry.

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