www.sec.gov/litigation/complaints/2023/comp25750.pdf
- SEC-registered investment adviser Infinity Q engaged in a fraudulent scheme that inflated by more than $1 billion the value of assets held by a mutual fund (the “Mutual Fund”) and a hedge fund (the “Private Fund”) Infinity Q advised (collectively, the “Infinity Q Funds” or the “Funds”).
- From at least February 2017 through February 2021 (the “Relevant Period”), Infinity Q represented to investors and others that certain holdings of the Infinity Q Funds were valued by an “independent” third party pricing service (the “Pricing Service”). In fact, Infinity Q was actively manipulating the valuation models available from the Pricing Service and altering inputs to mask the poor performance of the Funds.
- Unbeknownst to investors, Infinity Q knowingly inflated the Funds’ stated valuations in at least four ways during the Relevant Period. Infinity Q manipulated computer code to cause the valuation models to disregard certain information, entered inputs it knew were incorrect into the Pricing Service, selected certain valuation models in the Pricing Service that it knew could not properly value the relevant positions, and knowingly cherry-picked one of the key valuation inputs.
At times, Infinity Q had different valuations for the same position held by different Funds, and the Mutual Fund reported positions at mathematically impossible valuations.
Infinity Q forged transaction confirmation documents by changing the actual transaction terms in order to deceive the auditor into thinking that the Funds’ valuations were reasonable.
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