SEC Charges Infinity Q Capital Founder With Valuation Fraud

The U.S. Securities and Exchange Commission (SEC) has charged James Velissaris, former chief investment officer and founder of Infinity Q Capital Management, with overvaluing assets and pocketing tens of millions, a press release says.

Velissaris overvalued the assets by over $1 billion.

Allegedly, beginning at least in 2017 and going through February 2021, he executed a scheme to overvalue the assets held by the Infinity Q Diversified Alpha mutual fund and the Volatility Alpha private fund.

He did this by altering inputs and manipulating the code from a third-party pricing service that was used to value the assets.

Through doing this, Velissaris reportedly collected over $26 million in profit distribution through the fraud – which he didn’t disclose to investors.

“We allege that, while Velissaris marketed the mutual fund as a way for retail investors to access investment strategies typically reserved for high net worth clients, what he actually offered them were fraudulent documents, altered performance results, and manipulated valuations,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement. “This case affirms our commitment to using all our tools to root out misconduct in the $18 trillion private fund arena, a growing market attracting more and more institutional investors, including public pension funds, university endowments, and charitable foundations.”

PYMNTS wrote that the SEC also recently charged 12 financial advisors and firms for not meeting regulatory deadlines.

Read more: SEC Charges Firms for Missing Regulatory Deadlines

The charges involved the client or customer relationship summary, or Form CRS, which the firms and advisors were required to deliver to investors by June 30, 2020.

The defendants included six investment advisers and six broker dealers, who either failed to get the CRS to the clients on time or did not include enough info.

All the defendants have agreed to settle the charges.

“With today’s actions, the SEC has now charged forty-two financial firms for failing to meet the obligations that are required to ensure retail investors understand their relationships with their securities industry professionals,” said Sanjay Wadhwa, deputy director of the SEC’s Enforcement Division.