Nov 10 (Reuters) – The U.S. Securities and Alternate Fee on Thursday tentatively settled civil prices in opposition to an Infinity Q Capital Administration mutual fund over its founder’s alleged scheme to inflate the fund’s worth.
In papers filed in federal courtroom in Manhattan, the SEC and Infinity Q Diversified Alpha Fund requested a choose to nominate a particular grasp to supervise the fund’s ongoing liquidation. The fund additionally agreed to an order barring it from future violations of U.S. securities regulation.
The fund didn’t admit to wrongdoing.
Attorneys for the fund and Infinity Q didn’t instantly reply to requests for remark.
The SEC stated Thursday that $670 million from the fund has been returned to shareholders, whereas $570 million stays to be distributed.
Infinity Q liquidated its mutual funds after the SEC discovered that the agency’s founder and former chief funding officer, James Velissaris, made probably unreasonable changes to a pricing mannequin used to worth fund investments.
Earlier than it suspended investor redemptions in February 2021, the Diversified Alpha Fund’s property have been valued at $1.73 billion. A assessment by the fund as a part of its liquidation has since discovered that the property have been overvalued, at occasions by greater than 30%.
The fund stated in September that it had put aside roughly $74.1 million for bills together with authorized charges incurred within the liquidation.
If appointed, a particular grasp would oversee such expenditures.
U.S. authorities filed felony and civil prices in opposition to Velissaris in February, alleging he fraudulently overvalued property by greater than $1 billion. He has pleaded not responsible and is scheduled to face trial within the felony case on Nov. 28.
The case is SEC v. Infinity Q Diversified Alpha Fund, U.S. District Court docket, Southern District of New York, No. 22-cv-09608.
Reporting by Jody Godoy in New York; Modifying by Noeleen Walder and Jonathan Oatis
: .