The U.S. Securities and Exchange Commission has barred a former Armonk investment adviser from working in the industry for at least a year for his role in an investment funds valuation scheme.
The SEC accepted a settlement offer from Scott Lindell, 45, on April 16, in which he acknowledged a final judgment in a lawsuit that the commission brought against him in 2022. The agency had alleged that Lindell was negligent regarding another executive’s scheme to inflate the value of assets.
Lindell was the chief compliance officer, chief risk officer, head of operations, and a portfolio manager for Infinity Q Capital Management.
The Manhattan firm ran a mutual fund and a hedge fund that held over-the-counter derivatives that had to be priced by an independent valuation service.
From 2017 to 2021, Infinity founder and chief investment officer, James Velissaris, manipulated information used by the third-party valuation service, according to court records, to mismark, or overstate, the values of Infinity’s holdings.
As of 2021, the funds purportedly had $3 billion in assets that were actually worth about $2 billion.
Lindell, as a member of Infinity’s valuation committee, “failed to appropriately discharge his responsibilities in the face of multiple red flags regarding Infinity Q’s Valuations,” the SEC stated in announcing its lawsuit against Lindell in September 2022.
The SEC identified Velissaris as “the sole decision-maker” for the valuations. The agency sued Velissaris separately and also charged him criminally with obstruction of justice and making false statements to auditors.
Velissaris’ scheme enabled Infinity to attract new investors and dissuade current clients from redeeming their investments.
Lindell quickly agreed to settle his case.
The April 12 final judgment in the civil case orders him to permanently restrain himself from defrauding investors, bans him from acting as an officer or director of any issuer of securities for two years, and requires him to pay a $100,000 penalty.
The SEC’s April 16 administrative action bars Lindell from associating with anyone or any organization in the securities industry. He may apply for reentry to the industry after one year.
A year ago, Velissaris was sentenced to 15 years in federal prison and ordered to forfeit $22 million. Now 39, he is imprisoned in Jesup, Georgia, with a release date in 2035.
