Trading & Options · Profile from Trading and Options Research Companion
Infinity Q Capital Management
The New York volatility manager founded in 2014 by James Velissaris, formerly a portfolio manager at David Bonderman's family office Wildcat Capital (Institutional Investor, reported), which sold a "volatility alpha" strategy — OTC variance swaps, corridor variance swaps and other options-like positions — through a private fund (Infinity Q Volatility Alpha, >$1bn in mid-2020) and a daily-dealing mutual fund (Infinity Q Diversified Alpha Fund, ~$1.8bn in Feb 2021), and whose smooth returns were partly invented. From at least 2017 to February 2021 Velissaris altered the inputs and code of the third-party pricing service used to value the swaps, overvaluing the funds by more than $1bn at times (SEC press release 2022-29; CFTC release 8495-22). The SEC suspended the mutual fund's redemptions on 22 Feb 2021 (Investment Company Act Rel. No. 34198) and the funds were liquidated. Velissaris pleaded guilty on 21 Nov 2022 and was sentenced to 180 months on 7 Apr 2023 (Shared facts), with ~$22m forfeiture and ~$126m restitution. This is a single-event entity with six moves (rule 6). Its story turns on the evidence factor: in a strategy whose payoff is hard to value, the mark is the return, and nobody independent was checking it.
At a glance
- Founded
- 2014 by James Velissaris (Institutional Investor; the firm said Bonderman invested $2m at formation — reported)
- Headquarters
- New York (Velissaris described as "of Atlanta, Ga." in the CFTC's 2022 release)
- Ownership
- Private; Velissaris founder, CIO and majority owner (CFTC); registered investment adviser and CFTC-registered commodity pool operator
- Funds
- Infinity Q Diversified Alpha Fund (open-end mutual fund; investor class ticker IQDAX; ~6 years old and four-star Morningstar rated in Feb 2021 — InvestmentNews); Infinity Q Volatility Alpha Fund (private fund)
- Scale (dated, reported)
- Volatility Alpha >$1bn (17 Jun 2020, Velissaris to Institutional Investor); Diversified Alpha ~$1.8bn (Feb 2021); the firm "purported" to manage ~$3bn (DOJ, as reported)
- Claimed record (unaudited — rule 4(c), and later shown inflated)
- Volatility Alpha +11.91% in Q1 2018 (S&P 500 −1.22%), +5.65% in Q4 2018 (S&P −13.97%), +5.63% in Q1 2020; composite +9.7% YTD to Sep 2020 (Institutional Investor, 23 Feb 2021); Diversified Alpha +5.9% in 2020 (InvestmentNews)
- Regulators and courts
- SEC; CFTC; US Attorney SDNY; SDNY (Judge Denise Cote, criminal case)
- Signature moves (incl. failures)
- Founding from a family office (2014); the mutual-fund wrapper for OTC volatility (2014–15, verify launch); mismarking through the pricing service (2017–21); March 2020 claims and hidden losses; SEC exam, removal and redemption suspension (Feb 2021); charges, plea, sentence and distributions (2022–26)
6 strategic moves analysed
Each one gets a full strategy file in the companion: context, the decision, the financing, what happened, and the lesson.
2014
Diversified Alpha Mutual Fund for OTC Volatility
New strategy, product or market (a retail wrapper)
2014
Founding Infinity Q From a Family Office
Founding or fund launch
2017
Mismarking Through the Pricing Service
Rogue trade or control failure (valuation fraud)
2020
March Covid Claims and Hidden Losses
Loss, drawdown or blow-up response (concealed)
2021
SEC Exam Removal and Redemption Suspension
Restructuring, bailout or liquidation
2022
Charges Plea Sentence and Distributions
Regulatory, enforcement or legal action