The U.S. Securities and Exchange Commission (SEC) has filed a settlement lawsuit against former registered investment adviser Mass Ave Global Inc. and its co-founder and CEO Winston M. Feng, accusing them of making false and misleading statements to investors in the MassAve Flagship Opportunity Fund.

To resolve the SEC's charges, MassAve agreed to pay a civil penalty of $350,000, and Feng agreed to pay a civil penalty of $250,000. Additionally, Feng, who also served as MassAve's Chief Investment Officer and Portfolio Manager, has been suspended from the industry for 12 months.

According to the SEC's order, from 2020 to 2022, New York-based MassAve, an investment advisory firm focused on Asian investments with over $1 billion in regulatory assets under management, made a series of significant false and misleading statements regarding the holdings and risk exposure of its Flagship Opportunity Fund. The order found that some of these false statements resulted from Feng's alterations to the underlying portfolio data, which MassAve subsequently included in investor communications such as monthly tear sheets, portfolio summaries, and top ten holdings lists.

Furthermore, according to the SEC's order, from late 2022 to early 2023, MassAve failed to disclose to its investors the conflict of interest arising from another co-founder operating an independent hedge fund in China. The SEC's order against MassAve also found deficiencies in the company's compliance policies and procedures.

According to the SEC's order, in January 2023, MassAve informed investors that its communications about the Flagship Fund were inaccurate and lacked appropriate disclosures. Shortly thereafter, MassAve received a substantial number of redemption requests and subsequently began winding down its operations.

MassAve violated the anti-fraud and compliance provisions of the Investment Advisers Act of 1940, and Feng violated the anti-fraud provisions of the Advisers Act. Without admitting or denying the SEC's findings, MassAve and Feng agreed to the SEC's order requiring them to cease and desist from further violations, censuring MassAve, and imposing the aforementioned penalties.