New York-based hedge fund firm Mass Ave Global and Co-Founder and CEO Winston M Feng have agreed to pay a combined $600,000 in penalties to settle SEC charges that it made “false and misleading statements” to investors in its flagship Asia hedge fund.
MassAve has agreed to pay a civil penalty of $350,000, and Feng $250,000. In addition, Feng, who is also the Chief Investment Officer and Portfolio Manager at MassAve, has been suspended for 12 months from investment industry-related work.
According to the SEC’s orders, from 2020 to 2022, New York City-based MassAve, an investment adviser that made Asia-focused investments and that held more than $1bn in regulatory assets under management, 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, which MassAve then included in investor communications, such as its monthly tear sheets, summary portfolio snapshots, and top 10 position lists.
In addition, according to the SEC’s orders, from late 2022 to early 2023, MassAve did not report to its investors a conflict of interest arising from MassAve’s other co-founder operating a separate hedge fund in China. The SEC’s order against MassAve also found failures in the firm’s compliance policies and procedures.
According to the SEC’s orders, in January 2023, MassAve reported to investors that its communications about the flagship fund were inaccurate and did not contain appropriate disclosures. Soon thereafter, MassAve received a wave of redemption requests and has since been winding down operations.
The SEC’s orders found that MassAve violated the antifraud and compliance provisions of the Investment Advisers Act of 1940 and that Feng violated the antifraud provisions of the Advisers Act. Without admitting or denying the SEC’s findings, MassAve and Feng consented to the entry of the SEC’s orders requiring them to cease and desist from further violations, censuring MassAve, and imposing the penalties listed above.
The SEC’s investigation was conducted by Joseph P Ceglio and Kelly Rock, of the Division of Enforcement’s Complex Financial Instruments Unit, with assistance from Ling Yu and Travis Hill, of the New York Regional Office, and was supervised by Joshua Brodsky, also of the Complex Financial Instruments Unit.
