The 15-year prison sentence handed to Infinity Q Capital Management’s founder may signal that the Securities and Exchange Commission has increased its focus on valuation policies. However, the SEC’s valuation rule may not have directly impacted the outcome of the Infinity Q case.
Asset management partner Brian McCabe told Ignites that. “it probably wouldn't have made a difference because the conduct that was alleged in the complaint was sort of out-and-out fraud. That would have been illegal under any regime.”
Individuals who are accused of fraudulent activities are typically barred from the securities industry or saddled with fines, but not with significant jail time, he said. One of the terms of Lindell’s SEC settlement, for example, is that he can no longer serve as an officer or director in the investment industry.
Velissaris’ sentencing should be a “cautionary note about the importance of valuation, the segregation of responsibilities and professional skepticism,” Brian said.
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