The Securities and Exchange Commission filed a settled action against the Infinity Q Diversified Alpha Mutual Fund for mispricing its net asset value as part of a massive overvaluation scheme and is seeking in its complaint an order appointing a special master over the mutual fund to oversee the return of remaining funds to harmed investors.
The fund commenced operations in September 2014 as an open-end mutual fund.
According to the SEC’s complaint, from at least February 2017 through February 2021, the mutual fund’s reported NAVs were materially and falsely inflated due to a mismarking scheme conducted by James Velissaris, the founder and chief investment officer of Infinity Q Capital Management LLC, the investment adviser to the mutual fund.
Velissaris exercised control over Infinity Q during the relevant period until he was removed on around February 21, 2020.
Velissaris was previously charged by the SEC for this conduct. On February 22, 2021, Infinity Q and the mutual fund’s board filed an application to suspend redemptions in the mutual fund, which was approved by the SEC that same day. The mutual fund was subsequently liquidated, and the mutual fund has distributed approximately $670 million to current shareholders, with approximately $570 million remaining to be distributed to harmed investors.
The mutual fund has agreed to settle the charges and consent to the appointment of the special master to oversee expenses paid from the fund and to administer a process to return the remaining funds to harmed investors.