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An investor in shares of the Infinity Q Diversified Alpha Fund has filed a nationwide class action lawsuit against the issuer, advisor and trustees of the fund, alleging they made false and misleading statements in a prospectus that artificially inflated its value.
The class action was filed Tuesday by Plaintiff Leonard Sokolow against Infinity Q Capital Management,Trust for Advised Portfolios and its trustees in a New York federal court. It says shareholders were damaged by the defendants’ price manipulation, and their subsequent corrective disclosure. It also alleges violation of federal securities laws.
Sokolow says the defendants made false and misleading statements and failed to disclose important information in the Infinity Q 2019 prospectus.
The alleged false statements and omissions mainly concerned adjustments made by the fund’s Chief Investment Officer to certain parameters within the third-party pricing model that affected the valuation of swaps held by the fund, Sokolow says.
As a result, Infinity Q was not able to calculate the net asset value (NAV) correctly, making previously reported NAVs unreliable and causing the fund to halt redemptions and liquidate its assets.
Sokolow says the truth emerged on Feb. 22, 2021, when Infinity Q filed a request with the SEC for an order suspending the right of redemption with respect to shares of the fund because of Infinity Q’s inability to determine NAV.
The request also stated that the fund was liquidating its portfolio and distributing its assets to shareholders.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Fund’s shares, Plaintiff and other Class members have suffered significant losses and damages,” the class action states.
Sokolow says as a result of the misleading statements made by the trust, fund and trustees, the market price of the fund’s shares was artificially inflated during the Class Period.
“In ignorance of the falsity of the Trust’s, Infinity Q’s and the Individual Defendants’ statements, Plaintiff and the other members of the Class relied on the statements described above and/or the integrity of the market price of the Fund’s shares during the Class Period in purchasing the Fund’s shares at prices that were artificially inflated as a result of the Trust, Infinity Q, and the Individual Defendants’ false and misleading statements,” the class action states.
The class action is seeking certification of the Class, damages, interest, attorney’s fees and a jury trial.
Meanwhile, class action lawsuits brought under the Securities Exchange Act can sometimes end in large settlements. In 2012, Citigroup, Inc. reached a $590 million settlement with shareholders to resolve allegations it committed securities fraud.
Also in 2012, a securities lawsuit against Goldman Sachs Group, Inc., Bank of America, and several other large firms resulted in an $18.5 million settlement.
What do you think about this class action on behalf of Infinity Q stockholders? Let us know in the comments!
The plaintiff is represented by Thomas L. Laughlin, IV Rhiana L. Swartz of Scott+Scott Attorneys At Law LLP and Michael E. Criden and Lindsey Grossman of Criden & Love, P.A.
The Infinity Q Securities Class Action Lawsuit is Leonard Sokolow, as Trustee of the Leonard J. and Sharon R. Sokolow Revocable Trust 4/18/18, et al., v. Trust For Advised Portfolios, Infinity Q Capital Management, Llc, Christopher E. Kashmerick, John C. Chrystal, Albert J. Diulio, S.J., Harry E. Resis, Russell B. Simon. Leonard Potter, and James Velissaris, Case No. 1:21-cv-02317, in the United States District Court Eastern District of New York.
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