Infinity Q Capital Management, LLC

  • Active

Investigation
02/26/2021

Initial Lawsuit
02/26/2021

Lawsuit Progression
03/31/2022

Investigation

  • Continous Holding
    December 21, 2018 to February 22, 2021
  • Proposed Claim
    Securities Violation

Investigating Infinity Q Diversified Alpha Fund’s net asset value (NAV) calculations (notably swap pricing models) and its Chief Investment Officer (CIO) adjustments to certain parameters within the third-party pricing model that affected the valuation of the swaps held by the fund, ultimately rendering previously issued NAV unreliable.

Main Event

Undisclosed Changes to Pricing

02/19/2021

SEC Filing

Trust for Advised Portfolios and Infinity Q Capital Management LLC file an application (Federal Register link) with the SEC “to suspend the right of redemption with respect to shares of the Fund” because of its “inability, as required under the Fund’s valuation procedures, to value certain Fund holdings and the Fund’s resulting inability to calculate net asset value.”

The application further explains the CIO’s involvement:

“The Fund’s current portfolio includes swap instruments for which Infinity Q calculates fair value using models provided by a third-party pricing vendor. As of February 18, 2021, the Fund’s reported NAV was derived using a valuation for these Swaps that resulted in the value of the Swaps constituting approximately 18% of the Fund’s reported NAV.

On February 18, 2021, based on information learned by the Commission staff and shared with Infinity Q, Infinity Q informed the Fund that Infinity Q’s Chief Investment Officer had been adjusting certain parameters within the third-party pricing model that affected the valuation of the Swaps. On February 19, 2021, Infinity Q informed the Fund that at such time it was unable to conclude that these adjustments were reasonable, and, further, that it was unable to verify that the values it had previously determined for the Swaps were reflective of fair value. Infinity Q also informed the Fund that it would not be able to calculate a fair value for any of the Swaps in sufficient time to calculate an accurate NAV for at least several days. Infinity Q and the Fund immediately began the effort to value these Swap positions accurately to enable the Fund to calculate an NAV, which effort includes the retention of an independent valuation expert. However, Infinity Q and the Fund currently believe that establishing and verifying those alternative methods may take several days or weeks. Infinity Q and the Fund are also determining whether the fair values calculated for positions other than the Swaps are reliable, and the extent of the impact on historical valuations. As a result, the Fund was unable to calculate an NAV on February 19, 2021, and it is uncertain when the Fund will be able to calculate an NAV that would enable it to satisfy requests for redemptions of Fund shares.”
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Initial Lawsuit

Plaintiff brings this securities class action on behalf of all persons and entities who purchased the Infinity Q Diversified Alpha Fund Investor Class shares (IQDAX) or Institutional Class shares (IQDNX) between December 21, 2018 and February 22, 2021, both dates inclusive.

  • Filing Date
    02/26/2021
  • Class Period
    12/21/2018 to 02/22/2021
  • Transgression
    Securities Violation
  • Filing Firms
    The Rosen Law Firm, P.A.
  • Case Title
    Yang v. Trust for Advised Portfolios
  • Docket Number
    1:21-cv-01047
  • Court
    New York Eastern District Court
  • Free File
    Complaint

Allegations

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors that:

(1) Infinity Q’s Chief Investment Officer made adjustments to certain parameters within the third-party pricing model that affected the valuation of the swaps held by the Fund;
(2) consequently, Infinity Q would not be able to calculate NAV correctly;
(3) as a result, the previously reported NAVs were unreliable;
(4) because of the foregoing, the Fund would halt redemptions and liquidate its assets; and
(5) as a result, the Prospectuses were materially false and/or misleading and failed to state information required to be stated therein.

Defendants

  • Company
    Trust for Advised Portfolios
  • Company
    Infinity Q Capital Management, LLC
  • President
    Christopher E. Kashmerick
  • Trustee
    John C. Chrystal
  • Trustee
    Albert J. DiUlio, S.J
  • Trustee
    Harry E. Resis
  • Other
    Russell B. Simon
  • Chief Executive Officer
    Leonard Potter
  • Founder
    James Velissaris

Lawsuit progression

  • Docket Number
    1:21-cv-01047
  • Court
    New York Eastern District Court

Lead Counsel

03/31/2022

The court issued an order appointing the lead plaintiff and lead counsel.

  • Lead Counsel
    Robbins Geller Rudman & Dowd LLP
    Boies Schiller Flexner LLP
  • Lead Plaintiff
    Mixed Group
  • Free File
    Order for lead
[stockdio-historical-chart symbol=”IQDAX” stockExchange=”NYSENasdaq” width=”500″ height=”330″ motif=”blinds” palette=”humanity” includeVolume=false]

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