A formerly registered RIA in New York City and its co-founder have agreed to $600,000 in penalties to settle SEC charges that they made "false and misleading" statements to investors in the firm's flagship fund.

Company co-founder Winston M. Feng, who also acted as company CEO and chief investment officer, agreed to a one-year suspension as part of the settlement, the SEC said.

The SEC said in a press release that Feng and his company, Mass Ave Global Inc. (MassAve), provided inaccurate information to investors about the Asia-focused holdings and exposures of three private funds—its flagship "opportunity fund" and two feeder funds—from 2020 to 2022. The agency also found that the firm and Feng failed to disclose a conflict of interest arising from the involvement of the firm's other co-founder in a separate hedge fund in China. The other co-founder was not named in the complaint.

MassAve began operations in 2019 as an exempt reporting advisor and registered with the SEC in May 2021 as an investment advisor to 16 private funds, the SEC said. The firm reported managed assets of $1.1 billion in 2023, but its disclosure of the inaccurate statements that year led to a wave of investor redemptions and an announcement by the firm that it was withdrawing its registration and winding down the funds, the SEC said. The firm was managing about $93 million as of May 6 as the funds were being wound down, the regulator said.

"About one third of the fund’s investments were in companies located in China, and the remaining two-thirds were split between the rest of Asia and the world," the SEC said in its complaint. "MassAve’s investments outside China were made in contemplation of how the market in China would impact those companies."

The SEC said the inaccurate statements were uncovered through an internal review by MassAve that found its investor communications were sometimes being sent without first being reviewed by the firm’s compliance department, the SEC said. The internal review also found that Feng was sometimes modifying investor communications after they were reviewed by the compliance team, the regulator said.

"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," the SEC said in the release.

In the complaint, the SEC said, "MassAve’s dissemination of materially false and misleading statements in the investor communications resulted from its failure to adopt and implement policies and procedures reasonably designed to prevent inaccurate information in investor communications."

Under the settlement, MassAve agreed to pay a civil penalty of $350,000 and Feng agreed to a penalty of $250,000. During the time of the allegations, Feng was MassAve's co-founder, chief executive officer, majority owner, portfolio manager and chief investment officer, the SEC said.

Neither Feng nor other representatives of MassAve could be reached for comment.

“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 in a press release announcing the settlement. “We will continue to hold individuals accountable for falling short in making such disclosures.”