SEC Charges Infinity Q Investment Adviser with Fraud; Seeks Monitor to Oversee Return of Remaining Funds to Harmed Investors of the Infinity Q Private Fund

The Securities and Exchange Commission today filed a settled action against registered investment adviser Infinity Q Capital Management, LLC for mispricing the net asset value, or “NAV,” 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. The SEC previously 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. The SEC previously charged Velissaris for his role in the scheme.

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 of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; the antifraud, books and records, and reporting provisions of Sections 204(a), 206(1), 206(2), 206(4) and 207 of the Investment Advisers Act of 1940 and Rules 204-2(a), 206(4)-7, and 206(4)-8 thereunder; and the reporting provisions of Section 34(b) of the Investment Company Act of 1940 (“Investment Company Act”). 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.

The SEC’s ongoing investigation is being conducted by Zachary B. Sturges of the Complex Financial Instruments Unit, Ariana J. Torchin and Brian Fitzpatrick of the Asset Management Unit, and Kerri Palen, Preethi Krishnamurthy, James Addison, and Neal Jacobson of the New York Regional Office. It is being supervised by Andrew Dean, Co-Chief of the Asset Management Unit, Osman Nawaz, Chief of the Complex Financial Instruments Unit, Joshua Brodsky, Assistant Regional Director of the Complex Financial Instruments Unit, and Alistaire Bambach, Assistant Regional Director of the New York Regional Office and Chief Bankruptcy Counsel to the Division of Enforcement. The litigation will be led by Mr. Jacobson and Ms. Bambach.