Infinity Q: Independent Pricing With a Hand on the Numbers

The Infinity Q CFTC summary judgment ruling imposed a $2.2 million civil penalty on the founder and former chief investment officer for swap valuation fraud, against $22 million he personally received from the scheme. Investors had been told that an independent service valued the funds’ derivatives, while the executive admitted making manual adjustments that raised those values. For someone working in valuation, fund accounting or investor reporting, the important gap is between the process investors were promised and the numbers the business actually used.

The CFTC’s April 2, 2026 announcement describes the federal court’s March 30, 2026 opinion finding the executive liable and imposing a permanent civil trading ban. The opinion rejected the agency’s requests for additional payments to return gains and compensate the funds.

How the Infinity Q Valuation Scheme Worked

Infinity Q Capital Management operated two commodity pools, the Infinity Q Diversified Alpha Fund and the Infinity Q Volatility Alpha Fund. Both paid the manager performance and management fees based on net asset value. Raising the reported value of the investments therefore raised the amount used to calculate the manager’s compensation.

A commodity pool operator runs the investment vehicle and solicits or receives participants’ money for commodity-interest trading. Infinity Q held that registration, and its founder was registered as an associated person of the operator. Here, the executive responsible for valuing the funds’ derivatives also communicated with current and prospective investors about how those values were set.

According to the CFTC’s account in the opinion, those investors were told that Bloomberg Valuation Service independently valued the over-the-counter positions without substantive input from Infinity Q. The executive entered the positions into that system and manipulated its calculations to inflate their reported values. The court later relied on his criminal plea admissions in finding the fraud established.

We see the absurdity in the promise itself: investors were sold independence from the person whose compensation rose with the valuations. That same person had his hand on the numbers. The outside service’s name gave investors a reason to trust the process while the undisclosed adjustments changed what the process produced.

Inflated Values Changed Who Got Paid

The CFTC’s account connects the altered valuations to higher fees and overpayments to investors who redeemed their holdings. It also describes the services the funds needed after the misconduct became public, including asset reevaluation, liquidation, distribution and legal work. The agency put those excess fees, redemption overpayments and outside services together at $125,969,962, as recorded in the opinion.

The founder’s benefit sat alongside the payments leaving the funds through fees, redemptions and the later unwind. Fund accounting mattered because the false valuation flowed into actual payments, not just a performance report.

What the Variance Swaps Were Worth to the Funds

A variance swap ties its payoff to how much the value of an underlying asset moves over time. One side pays an amount based on actual variance and the other pays a fixed amount, with the difference ordinarily settled in cash when the contract expires. Infinity Q’s funds held these over-the-counter contracts on groups or indexes of securities, including the S&P 500.

A corridor variance swap narrows that calculation to observations within an agreed range. Values above or below the corridor are left out of the volatility calculation. Those contract terms make the inputs to a valuation consequential: they describe the exposure being priced, which then contributes to the fund value reported to investors.

The 2024 working paper An Analysis of Market Manipulation Definitions Around the World from a World Federation of Exchanges research project identifies limited transparency in over-the-counter markets as a challenge to detecting manipulation. Investors were being asked to trust an independent valuation process while the person running it concealed his adjustments.

For a valuation professional, the link between the contract and the reported price is the useful part of this story. An input, a calculation and the figure delivered to fund accounting show different stages of the same decision. The SEC’s separate allegations describe how far the interference with that process allegedly reached.

The SEC Alleged That the Paperwork Was Changed Too

The SEC’s February 17, 2022 announcement alleged that the founder overvalued assets by more than $1 billion by altering pricing inputs and manipulating the code of a third-party service. It identified the Diversified Alpha vehicle as a mutual fund and the Volatility Alpha vehicle as a private fund. The alleged scheme reached both, giving people working across those businesses a common valuation process to recognize.

The SEC also alleged that the founder created backdated minutes for valuation meetings that never happened, altered documents describing Infinity Q’s valuation policies, and sent forged term sheets to the funds’ auditor. These allegations concern the materials someone reviewing the prices would expect to rely on. A policy describes who may change a valuation; meeting minutes purport to show oversight; a term sheet describes the contract being valued.

That is why a comparison between the pricing work and the explanation given to auditors matters as much as the final reported price. Under the SEC’s account, the alleged concealment reached the very documents meant to explain and check the valuations.

The SEC further alleged that masking actual performance helped prevent redemptions by investors who would otherwise have asked for their money back, especially during the pandemic’s volatile markets. It reported that its staff confronted Infinity Q with information suggesting adjustments to the pricing model, and the founder was removed in February 2021.

What the Founder Admitted in His Criminal Plea

In his November 21, 2022 criminal guilty plea, as reproduced in the civil opinion, the founder admitted knowingly making false statements about the valuation process with intent to defraud. He said he had told investors an independent Bloomberg system valued the derivatives, while he was making manual adjustments that increased their reported values. His explanation also connected the concealment directly to investors’ decisions:

The civil court held that he could not dispute those admitted facts again in the CFTC action. It found him liable for fraud on every count the CFTC brought.

For a fund insider, the admission connects knowledge of the adjustment with knowledge of its effect on an investor’s choice. The executive understood that disclosure could change whether people invested or stayed. That connection gives investor calls and emails a different significance from a spreadsheet that shows only the resulting value.

Why the Court Awarded Less Than the CFTC Requested

The CFTC requested a $66 million civil penalty, which the opinion describes as three times the founder’s personal gain. The court reduced that request after weighing the seriousness of the fraud and the additional deterrent value of a civil penalty. We see a civil penalty far smaller than the personal gain, even after the agency proved its fraud claims.

The CFTC also asked the court to make him hand back his personal gain and repay the funds’ losses. The court denied both requests as duplicative because existing orders already covered his personal gain and the funds’ losses, and the agency had not explained why additional orders were needed. Its permanent civil ban covered trading and transactions in commodity interests, as well as registration with the CFTC.

What Evidence Is Required to Prove Fraud?

In a valuation case like Infinity Q, the evidence connects what investors were told, who changed the prices, and how those changes affected fund values and payments. The opinion makes those connections concrete through investor calls and emails, entries into the Bloomberg system, manual adjustments, fee calculations and redemption overpayments. The SEC’s allegations add valuation-policy documents, meeting minutes and the term sheets sent to auditors.

Different people can explain different parts of that process. A valuation employee may understand the inputs or code, a fund accountant may understand how the prices entered the net asset value, and an investor-relations employee may know what participants were told about independence. We work with that knowledge to connect the decisions inside the business to the representations and the money.

The nearest parallel is North Hills Management, where a civil consent order described allegations of diverted pool money concealed through false reports. Infinity Q’s case centers on altered valuations feeding the reported fund value. Both show why the account delivered to investors needs to be read alongside the records of what happened to their money.

Our work with CFTC whistleblower lawyers who understand fund valuation begins with that connection. Your knowledge of the business may concern the pricing process, the investor promise or the payment calculation. We shape that knowledge into your strongest CFTC whistleblower case and stay with you through it.

How Much Is a Whistleblower Claim Worth?

The CFTC whistleblower reward program can pay 10% to 30% of the money collected in a qualifying action. We work with you and specialist CFTC whistleblower lawyers to connect what you know about the valuations to the fraud behind them.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The CFTC operates a separate whistleblower program, and this valuation action arose under the Commodity Exchange Act. We bring the fund’s conduct and your knowledge together with whistleblower lawyers who understand the relevant program.

You Know How the Price Reached the Report

If you saw a valuation override, an invented meeting record or a pricing explanation that did not match the work, tell our whistleblower experts what changed inside the fund. We build the case with you and bring in CFTC whistleblower lawyers who can connect the derivatives, the reporting and the money. Speak to one of our Whistleblower Experts about how the fund’s prices were set.