Infinity Q Diversified Alpha Fund (IQDNX/IQDAX) Liquidation

Infinity Q Diversified Alpha Fund (IQDNX/IQDAX) Liquidation

This website is operated by the Infinity Q Diversified Alpha Fund (the “Fund”) to provide information on the Fund’s liquidation and distribution process.*  Please check this website regularly for future updates and information, as well as for certain Fund documents relating to the Fund’s liquidation and distribution.  Shareholders or their representatives who have questions about the Fund can submit them using the “Submit Inquiry” link above.  The Fund will strive to answer as many inquiries as it can through the FAQ section of the website.  All questions about the distribution process should be directed to the website and not the Fund's telephone line, which is limited to maintenance questions or requests. Shareholders with account-specific maintenance questions or requests may call the Fund at 844-473-8631 for more information.  

SEC Settlement (New 11/10/2022):  On November 10, 2022, the SEC and the Fund announced a settlement of the SEC’s claims against the Fund relating to the alleged mispricing of the Fund’s assets in violation of Rule 22c-1 under the Investment Company Act of 1940. The SEC's action does not allege that the Fund committed any violations of the antifraud provisions of the federal securities laws. In the settlement, the Fund agreed to the appointment of a Special Master to, among other things, oversee the remaining distribution of the Fund’s assets.  The settlement with the SEC, together with the recent proposed settlement of the pending securities class actions against the Fund, is another important step in the Fund’s ongoing efforts to resolve its remaining liabilities and get additional money paid to shareholders.  The Fund’s statement regarding the settlement can be found here and documents related to the SEC’s action can be found here and here.  

Update on Proposed Settlement of Securities Class Actions Against the Fund (New 11/10/2022): Pursuant to the October 17, 2022 order summarized in the 10/28/2022 Update immediately below, which preliminarily approved the proposed settlement of the securities class actions and set forth a process for providing shareholders with notice and proof of claim forms for the proposed settlement, the plaintiffs in the securities class actions have created a website, www.InfinityQSecuritiesSettlement.com, that provides information to potential class members relating to the proposed settlement.  The website contains general information concerning the proposed settlement, forthcoming key deadlines relating to the proposed settlement, and links to the court-approved notice, proof of claim and release, and other key documents.  Shareholders or their representatives may consult that website to learn more about the proposed settlement, file a proof of claim and release, or contact the claims administrator with questions.  

Update on Proposed Settlement of Securities Class Actions Against the Fund (New 10/28/2022): On October 17, 2022, the court presiding over the proposed settlement of the securities class actions pending in state and federal courts in New York held a hearing and entered an order preliminarily approving the proposed settlement and set in motion the process of providing shareholders with notice and proof of claim forms of the proposed settlement.  The notice will include instructions on how to participate in the settlement, object to it, or opt-out of the settlement.  The court scheduled a fairness hearing on January 31, 2023 to determine whether the settlement should be approved.  The order is available here.

Regulatory Update (New 10/4/2022): On September 30, 2022, the SEC commenced a civil action against Scott Lindell, the former chief risk officer and chief compliance officer of IQCM, for violating the anti-fraud and other provisions of the federal securities laws.  The SEC complaint alleges that Mr. Lindell ignored “red flags” concerning Mr. Velissaris’s overvaluation of Fund assets, misrepresented the valuation process to investors, and aided Mr. Velissaris in obstructing the SEC’s investigation.  

The SEC complaint against Mr. Lindell can be found at: https://www.sec.gov/litigation/complaints/2022/comp25542.pdf.   Simultaneously with the filing of the complaint, Mr. Lindell agreed to a partial settlement with the SEC in which he agreed to the entry of an injunction, with financial penalties and disgorgement, if any, to be determined later.

The Trust will continue to cooperate with the SEC and other federal authorities.

Revised FAQs: On September 14, 2022, the Fund revised Frequently Asked Questions 2.16, 2.17 and 4.2.

Proposed Settlement of Securities Class Action Against the Fund.  As of September 7, 2022, the Fund and other defendants in the pending New York state court securities class actions and federal court securities class actions have entered into a Stipulation of Settlement (the “Stipulation of Settlement”) with the plaintiffs in those cases which would fully resolve the securities litigation and release the claims of all class members other than those who opt out.  The proposed settlement is subject to Court review and approval and certain other conditions.  The Fund anticipates that the court approval process will take several months and will not conclude before year-end 2022. 

The Stipulation of Settlement creates a cash settlement fund of $39,750,000 which can increase up to $48,000,000 based on the occurrence of certain contingencies.  The settlement fund does not include any monies from the Special Reserve that the Fund established to satisfy the Fund’s current and future legal obligations. The settlement documents were filed with the Court on September 7, 2022 and can be found under Important Documents.

The Lead Plaintiffs’ counsel are establishing a website in order to make information concerning the proposed settlement, including the settlement documents, easily accessible to interested parties.  Upon preliminary approval by the Court, the Lead Plaintiffs’ counsel will also be sending notices to all Fund shareholders or their designees.  If you have any questions concerning the proposed settlement, you should consult with Plaintiffs’ counsel.

Please note: 

  • The Stipulation of Settlement does not resolve or release the pending derivative action filed on behalf of the Fund in Delaware.
  • The Stipulation of Settlement relates to Fund shareholders’ claims, but it does not resolve or release the Fund’s claims or potential claims that the Special Litigation Committee (“SLC”) established in December 2021 is investigating and may pursue.  
  • The Fund’s prior and future interim distributions of its net assets are separate from this Settlement.  
  • Current shareholders of the Fund that have been subject to reduction in their distributions due to net gains obtained by such shareholders’ purchases and redemptions of the Fund shares prior to February 19, 2021 may continue to have future distributions from the Fund reduced due to net gains.  
  • Whether a current shareholder chooses to participate in the Settlement has no bearing on whether that shareholder of the Fund will be eligible to receive any future distributions made by the Fund.  
  • Whether a current shareholder chooses to participate in the Settlement has no bearing on whether that shareholder of the Fund will be eligible to receive any proceeds of claims pursued against any settling defendant by any governmental or regulatory enforcement authority, including the U.S. Attorney’s Office for the Southern District of New York, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.

Update on Second Interim Distribution: On April 28, 2022, the Fund wired funds for the Second Interim Distribution to all intermediaries and custodians with a few exceptions described below.  In total, there are more than 40,000 distinct shareholder accounts holding shares of the Fund, and it takes several days and weeks for the intermediaries and custodians to credit the shareholder accounts.  Checks for the shareholders who have direct accounts were mailed the week of May 2, 2022.  On May 4, 2022, the Fund disbursed funds for the distribution allocated to accounts at Fidelity.  Funds for UMB accounts were wired on May 10, 2022, and funds for SEI Private Trust were wired on June 24, 2022.  Funds for NATC accounts were wired on July 5, 2022. As of August 26, 2022, the Fund has distributed more than $160 million in the Second Interim Distribution.

Fund Announces Second Interim Distribution of $170 Million: The Fund has commenced the process of making an interim $170 million distribution to the Fund’s shareholders in accordance with the Fund’s Plan of Distribution (the “Plan”), a copy of which can be found at Plan of Distribution.  After the completion of the second interim distribution, the Fund will have distributed more than 50 percent of the Fund’s assets after completion of the liquidation mandated under the SEC’s Order of February 22, 2021.  The Fund anticipates it will begin sending checks and distributing amounts to intermediaries with respect to the interim distribution in April 2022.  The Fund will update the website once the distribution is made.  However, shareholders should expect it will take several days for the intermediaries and custodians to credit the shareholder accounts.  

Re-Valuation of Fund Assets: Alvarez & Marsal (“A&M”) recently finalized its evaluation of the extent to which the Fund’s Bilateral OTC Positions were overstated in prior periods and the effect on the Fund’s NAV for prior periods.  Based on A&M’s independent valuation, A&M concluded that the Fund’s Bilateral OTC Positions were overstated at each month-end date from February 2017 through January 31, 2021.  When A&M’s valuations are used for calculation of the Fund’s NAV, the Fund’s reported month-end NAV was overstated by less than 10% prior to October 31, 2019, more than 10% from October 31, 2019 through January 31, 2021, and for most months in 2020 it was more than 30% overstated.  The Fund has provided the A&M revaluation results to the SLC for its investigation and pursuit of potential claims on behalf of the Fund.

Regulatory Update: On February 17, 2022, the United States Attorney’s Office for the Southern District of New York (“SDNY”) unsealed an indictment charging James Velissaris, the founder and former chief investment officer of Infinity Q Capital Management LLC (“IQCM”), with securities and other frauds, making false statements to auditors, and obstruction of justice.  The charges relate to Mr. Velissaris’s alleged orchestration of a scheme to defraud investors, mismark securities, and falsify documents.  The federal indictment of Mr. Velissaris can be found at:  https://www.justice.gov/usao-sdny/press-release/file/1473521/download

Also on February 17, 2022, the Securities and Exchange Commission (“SEC”) commenced a civil action against Mr. Velissaris for violating the anti-fraud and other provisions of the federal securities laws.  The Commodity Futures Trading Commission (“CFTC”) also filed a civil action against Mr. Velissaris for violating the anti-fraud and other provisions of the Commodity Exchange Act. 

The SEC Complaint alleges that Mr. Velissaris, from at least 2017 through February 2021, engaged in a fraudulent scheme to overvalue assets held by the Fund and the Infinity Q Volatility Alpha Fund, L.P., a separate private fund managed by IQCM, and that Mr. Velissaris hid his conduct from the Fund Administrator, external Fund Auditor, and the Trust Board; in some instances, including by altering documents in his attempts to do so. 

The SEC complaint against Mr. Velissaris can be found at: https://www.sec.gov/litigation/complaints/2022/comp-pr2022-29.pdf

The CFTC complaint against Mr. Velissaris can be found at: https://www.cftc.gov/PressRoom/PressReleases/8495-22

The Trust will continue to cooperate with the federal authorities in these matters.

Litigation Update: On February 9, 2022, Charles Sherck, an individual shareholder in the Fund, filed a securities class action complaint against U.S. Bancorp Fund Services, LLC (“USBFS”) in the Circuit Court of Milwaukee County in the State of Wisconsin. The complaint asserts claims under the Securities Act of 1933. The case is Sherck v. U.S. Bancorp Fund Services, LLC; Case No. 2022cv000846 (Wisconsin).  

On February 17, 2022, plaintiffs’ lawyers for the presumptive lead plaintiff in the securities class action pending in federal court in the Eastern District of New York (Yang v. Trust for Advised Portfolios, et al; Case Number: 1:21-cv-0147 (E.D.N.Y.)), filed a complaint adding new allegations based in part on facts alleged in the SEC Complaint against Mr. Velissaris and adding new defendants, including but not limited to the separate Infinity Q hedge fund.  The plaintiffs are Schiavi + Company LLC (“S+C”) which is an investment advisor seeking to recover damages on behalf of itself and its client accounts on whose behalf S+C invested in the Fund between December 21, 2018 and February 22, 2021, and (b) Dominus Multimanager Fund, Ltd., an entity that invested in the separate Infinity Q Volatility Alpha Offshore Fund, Ltd. during that same period.  Defendants are the Trust, Infinity Q Capital Management LLC (“IQCM”), Christopher E. Kashmerick, John C. Chrystal, Albert J. DiUlio, S.J., Harry E. Resis, Russell B. Simon, Steven J. Jensen, James Velissaris, Leonard Potter, Scott Lindell, Quasar Distributors, EisnerAmper LLP, USBFS, Bonderman Family Limited Partnership, LP, Infinity Q Management Equity, LLC, and Infinity Q Volatility Alpha Offshore Fund, Ltd.  The case is Schiavi + Company LLC DBA Schiavi + Dattani and Dominus Multimanager Fund, Ltd. v. Trust for Advised Portfolios, et al.; 1:22-cv-00896 (E.D.N.Y.).

On February 23, 2022, Todd Rowan, an individual investor in the Fund, filed a derivative action purportedly on behalf of the Fund in the Chancery Court in the State of Delaware against IQCM, USBFS, and the trustees and officers of the Fund.   This shareholder derivative action asserts claims for breach of contract against IQCM and USBFS and claims for breach of fiduciary duty against IQCM, the trustees and officers of the Fund.  The case is Todd Rowan v. Infinity Q Capital Management, LLC, et al., Index No. 2022-0176 (Delaware Chancery Court).    

Special Litigation Committee Update: On March 3, 2022, the Board appointed a second member to the Special Litigation Committee (the "SLC"). An announcement relating to the appointment can be found here.

As previously reported, on December 20, 2021, the Board approved the creation of a Special Litigation Committee (the “SLC”) for the purpose of investigating and pursuing potential claims on behalf of the Fund. The SLC will carry forward the Fund’s investigation and prosecution of potential claims against service providers to or former shareholders of the Fund. An announcement relating to the SLC can be found here.

Updated Net Asset Value per Share: On December 30, 2021, the Fund published an updated NAV per share of $0.0250 for Institutional Class shares and $0.0250 for Investor Class shares. The reasons for publishing the updated NAV per share and an explanation of how the updated NAV per share was calculated can be found at FAQ 4.7.

Interim Distribution Update: The Fund has made the Interim Distribution as set forth in the Plan of Distribution. If you have not received an Interim Distribution payment, please see FAQ 2A.3 for more information. 

Redemption Claims:  If a shareholder submitted a request to redeem shares on or before 4:00 p.m. EST on February 18, 2021 that was not paid in February 2021, the Plan of Distribution treats that shareholder as having a “Redemption Claim.”  On January 25, 2022, the Fund directed payment to the intermediaries for the thirteen accounts holding Redemption Claims.  The total amount paid relating to Redemption Claims is $16,653.88.  Upon receipt of such payment, those shareholders will have been paid in full for those shares at the NAV reported on the date the shareholder attempted to redeem the shares.  Please view the Plan of Distribution for more information on the treatment of “Redemption Claims” as defined in the Plan.

March 8, 2022 - Frequently Asked Questions updated

IRS Form 8937 - 2021

Plan of Distribution - Month End Reports

*  This website is not affiliated with, and does not provide any information regarding, Infinity Q Capital Management (“Infinity Q”) or any products other than the Infinity Q Diversified Alpha Fund.  Investors or shareholders of other funds managed by Infinity Q should contact Infinity Q for information regarding those funds.

 

Locations

  • California
    410 Exchange
    Ste 100
    Irvine, CA 92602
  • Colorado

    8269 E. 23rd Avenue
    Ste 275
    Denver, CO 80238

  • Illinois

    500 Davis Street
    Ste 800
    Evanston, IL 60201

  • New York

    7 Times Square
    16th Floor
    New York, NY 10036

  • OHIO

    4540 Honeywell Court
    Dayton, OH 45424

Head Quarters
California
410 Exchange
Ste 100
Irvine, CA 92602
Colorado

8269 E. 23rd Avenue
Ste 275
Denver, CO 80238

Illinois

500 Davis Street
Ste 800
Evanston, IL 60201

New York

7 Times Square
16th Floor
New York, NY 10036

OHIO

4540 Honeywell Court
Dayton, OH 45424