NEW YORK--(BUSINESS WIRE)--Morris Kandinov LLP announced today that it has filed a motion to intervene on behalf of an investor in the Infinity Q Diversified Alpha Fund (IQDNX/IQDAX) to stop a proposed settlement in a pending class action that, if approved, would release millions of dollars of liability in exchange for a negligible settlement payment.
The Infinity Q fund revealed, in early 2021, that its portfolio was subject to significant valuation errors that required it to liquidate immediately. Following the liquidation, the cash value of the fund’s portfolio was roughly $500 million less than its last stated net asset value. Since then, the fund has made partial liquidation payments to investors, but has retained a large reserve. A proposed settlement in a class action pending in New York contemplates, among other things, that the fund’s primary service provider responsible for securities valuation, U.S. Bancorp Fund Services, LLC, would receive a class-wide release of investor claims in exchange for a payment of only $250,000 (less than 1% of the losses caused by the valuation errors).
The investor’s motion seeks to stop the New York settlement with respect to U.S. Bancorp in order to allow the first-filed class action against U.S. Bancorp to proceed in Wisconsin. The New York settlement expressly seeks to preclude the Wisconsin suit.
The investor making the motion, Charles Sherck, commented: “Investors in the Infinity Q fund have lost a sizable chunk of their investments, and the people who appear to have been in the best position to prevent those losses were the valuation professionals at U.S. Bank, who were responsible for calculating the fund’s net asset value. A couple hundred thousand dollars is simply not a fair settlement for a case of this magnitude.”
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New York class action: In re Infinity Q Diversified Alpha Fund Securities Litigation, Index No. 651295/2021 (N.Y. Sup. Ct.)
Wisconsin class action: Sherck v. U.S. Bancorp Fund Services, LLC, Case No. 2022CV000846 (Wis. Cir. Ct.)