The Securities and Exchange Commission filed a settled action against registered investment adviser Infinity Q Capital Management LLC for mispricing the net asset value of its public mutual fund and private fund as part of a massive overvaluation scheme.
The SEC’s complaint seeks an order appointing a monitor to oversee the return of remaining funds to harmed private fund investors.
Previously, the SEC charged the mutual fund with mispricing its NAV, and the court appointed a special master to oversee the distribution of the mutual fund’s remaining funds to its harmed investors.
According to the SEC’s complaint, from at least February 2017 through February 2021, the mutual fund’s and hedge fund’s reported NAVs were materially and falsely inflated due to a fraudulent mismarking scheme conducted by Infinity Q through its chief investment officer, James Velissaris. As The DI Wire previously reported, the SEC previously charged Velissaris for his role in the scheme.
According to the complaint, by September 2020, Infinity Q’s fraudulent scheme had resulted in an overvaluation of the Infinity Q Funds by more than $1 billion.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Infinity Q with violating the antifraud provisions. It also charges Infinity Q with aiding and abetting the mutual fund’s violation of the pricing provisions of Rule 22c-1 under the Investment Company Act.
Infinity Q has agreed to settle the charges and consent to the appointment of the monitor. The settlement, which permanently enjoins Infinity Q from violating the federal securities laws charged in the complaint, and the appointment of the monitor, are subject to court approval.