Glenmede Trust Co., N.A. v Infinity Q Capital Mgt.

LLC

2024 NY Slip Op 30373(U)

January 31, 2024

Supreme Court, New York County

Docket Number: Index No. 160830/2022

Judge: Melissa A. Crane

Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York

State and local government sources, including the New

York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official

publication.
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 1 of 12

The following e-filed documents, listed by NYSCEF document number (Motion 010) 123, 124, 125, 126, 

127, 128, 129, 130, 131, 149, 154, 159

were read on this motion to/for DISMISS .

Defendant EisnerAmper LLP (“EisnerAmper” or “Defendant”) has moved to dismiss 

Plaintiff The Glenmede Trust Company, N.A.’s (“Glenmede” or “Plaintiff”) amended complaint 

pursuant to CPLR 3211(a)(7). The amended complaint alleges one cause of action against 

EisnerAmper, for violation of section 11 of the Securities Act of 1933 (15 USC § 77k). For the 

following reasons, the court denies EisnerAmper’s motion to dismiss.

FACTUAL AND PROCEDURAL BACKGROUND

The court refers to its December 21, 2023 decision and order on Defendant US Bancorp 

Fund Services, LLC’s (“US Bancorp”) motion to dismiss (NYSCEF Doc. No. 199) for a more 

complete recitation of the facts related to this matter. However, the court provides factual 

background specific to EisnerAmper.

SUPREME COURT OF THE STATE OF NEW YORK

NEW YORK COUNTY

PRESENT: HON. MELISSA A. CRANE PART 60M

Justice 

---------------------------------------------------------------------------------X INDEX NO. 160830/2022

 MOTION DATE 11/15/2023

 MOTION SEQ. NO. 010

DECISION + ORDER ON 

MOTION

THE GLENMEDE TRUST COMPANY, N.A.,

 Plaintiff, 

- v -

INFINITY Q CAPITAL MANAGEMENT LLC,JAMES 

VELISSARIS, LEONARD POTTER, SCOTT LINDELL, 

BONDERMAN FAMILY LIMITED PARTNERSHIP, LP, 

INFINITY Q MANAGEMENT EQUITY LLC,TRUST FOR 

ADVISED PORTFOLIOS, U.S. BANCORP FUND 

SERVICES, LLC,EISNERAMPER LLP, QUASAR 

DISTRIBUTORS, LLC,JOHN C. CHRYSTAL, ALBERT J. 

DIULIO, CHRISTOPHER E. KASHMERICK, HARRY E. 

RESIS, RUSSELL B. SIMON, STEVEN J. JENSEN,

 Defendant. 

---------------------------------------------------------------------------------X

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

1 of 12 [* 1]
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 2 of 12

This matter arises in connection to the collapse of a mutual fund called Infinity Q 

Diversified Alpha Fund (“Mutual Fund”). Defendant Infinity Q Capital Management LLC 

(“Infinity Q”) managed the Mutual Fund, selecting the Mutual Fund’s portfolio of investments 

(Amended Complaint, NYSCEF Doc. No. 101, ¶¶ 28, 54). Individual defendants James Velissaris 

(“Velissaris”), David Bonderman (“Bonderman”), Leonard Potter (“Potter”), and Scott Lindell 

(“Lindell”) launched Infinity Q in 2014, allegedly to act as investment advisor for both the Mutual 

Fund and a separate private hedge fund (“Hedge Fund”) (id., ¶ 4). Rather than stock the Mutual 

Fund with traditional stocks and bonds, Infinity Q selected variance swaps as part of its strategy 

to “generate absolute returns that did not depend on what direction the market moved, but rather 

on how much the market moved (i.e., how volatile the market was)” (id., ¶ 5).1 However, because 

these types of securities had no readily available market prices, Infinity Q had to generate its own 

net asset value (“NAV”) of the assets in the Mutual Fund on a daily basis (id., ¶¶ 6-7). Infinity Q 

generated this NAV using the third-party valuation service that it purchased from Bloomberg, 

called BVAL (id., ¶ 131). The root of both this action and the criminal action in which Velissaris

pled guilty is that, rather than report the NAV accurately, Velissaris artificially inflated the NAV

by hundreds of millions of dollars through manipulating BVAL (id., ¶¶ 9-10, 167). In particular, 

the amended complaint alleges that Velissaris, among other things, entered incorrect inputs into 

BVAL and altered BVAL’s underlying code, resulting in the swaps being “massively overvalued” 

for several years (id., ¶¶ 169-78). This resulted in an SEC investigation beginning in 2020 and the 

subsequent collapse of the Mutual Fund (id., ¶¶ 11-13).

1 According to the amended complaint, variance swaps allow buyers to “bet on the volatility of an underlying asset, 

security, index, or currency exchange” (Amended Complaint, ¶ 116). For each variance swap, the parties determine a 

“strike price” (id., ¶ 118). If volatility “exceeds the strike price, the buyer of the swap . . . receives the payment,” but 

if volatility “is below the strike price, the seller of the swap . . . receives the payment” (id.). 

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

2 of 12 [* 2]
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 3 of 12

Plaintiff alleges causes of action under sections 11, 12(a)(2), and 15 of the Securities Act 

of 1933 against a number of “gatekeeper” defendants, who allegedly abdicated their duties and 

allowed the conduct that led to the collapse of the Mutual Fund to occur. One of those alleged 

gatekeepers is EisnerAmper. EisnerAmper is a public accounting firm which acted as the Mutual 

Fund’s auditor since 2018 (id., ¶ 34). In this role, EisnerAmper allegedly “conducted tasks to 

validate Infinity Q’s valuation of the Mutual Fund’s holdings, including attempting to 

independently verify those valuations,” and also “agreed to review the Mutual Fund’s portfolio on 

a quarterly basis to ensure that it was promptly made aware of any new derivative positions held 

by the Mutual Fund” (id.). 

In particular, EisnerAmper allegedly issued audit reports in which EisnerAmper “stated 

that the Mutual Fund’s financial statements conformed with United States generally accepted 

accounting principles (‘U.S. GAAP’) and presented fairly, in all material respects: (a) the 

consolidated financial position of the Mutual Fund as of the audit date; (b) the consolidated results 

of the Mutual Fund’s operations as of the audit date; and (c) the changes in net assets and financial 

highlights for each of the years in the two-year period then ended” (id., ¶ 104). The amended 

complaint also alleges, in connection with its validation of Infinity Q’s valuation of the Mutual 

Fund’s holdings, EisnerAmper “communicated with the custodian, prime broker, and third-party 

counterparties of the Mutual Fund about those holdings” and “evaluated significant estimates made 

by Infinity Q by conducting a ‘re-performance’ test that attempted to replicate Infinity Q’s 

valuation of the Mutual Fund’s assets” (id., ¶ 106). 

The Mutual Fund is a “series” of Defendant Trust for Advised Portfolios (“Trust”) (id., ¶ 

32). On December 20, 2019, the Trust issued shares in the Mutual Fund pursuant to a registration 

statement (“December 2019 Registration Statement”) (id., ¶¶ 32, 142). The December 2019 

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

3 of 12 [* 3]
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 4 of 12

Registration Statement states that the “information for the fiscal years ended August 31, 2018 and 

August 31, 2019 have been audited by EisnerAmper” (December 2019 Registration Statement, 

NYSCEF Doc. No. 127, p. 37; Amended Complaint, ¶ 146 [alleging that the December 2019 

Registration Statement represented that EisnerAmper audited the NAV for 2018 and 2019]). 

Elsewhere, the December 2019 Registration Statement indicates that EisnerAmper “is the 

independent registered public accounting firm for the Fund, whose services include auditing the 

Fund’s consolidated financial statements” (id., p. 80). Additionally, the December 2019 

Registration Statement contains as an exhibit a “Consent of Independent Registered Public 

Accounting Firm,” pursuant to which EisnerAmper allegedly “consented to its inclusion in the 

December 2019 Securities Act Filing” (id., p. 120; Amended Complaint, ¶ 145). 

The amended complaint alleges only one cause of action against EisnerAmper, for 

violation of section 11 of the Securities Act. This cause of action is based on allegedly false 

statements of material fact and/or omitted material facts within the December 2019 Registration 

Statement (Amended Complaint, ¶ 270). Plaintiff asserts that EisnerAmper is liable under section 

11 because (1) EisnerAmper certified the Mutual Fund’s financial statements that were materially 

false (id., ¶ 274; Opposition, NYSCEF Doc. No. 159, p. 14); (2) EisnerAmper allegedly falsely 

stated that its audits complied with industry standards (Amended Complaint, ¶ 105; Opposition, 

pp. 16-17); and (3) EisnerAmper omitted from its audit statements incorporated in the December 

2019 Registration Statement a number of “red flags” of which it was aware or should have been 

aware, thus making the December 2019 Registration Statement misleading (Amended Complaint, 

¶¶ 22, 139, 158, 164, 183, 192, 195, 202, 270; Opposition, p. 17). 

Included among those “red flags” that Plaintiff alleges in the amended complaint, and 

reiterates in its opposition papers (Opposition, pp. 17-18), are the following:

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

4 of 12 [* 4]
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 5 of 12

• Disparities between Infinity Q valuations of the Mutual Fund’s holdings and counterparty 

valuations of those holdings (Amended Complaint, ¶ 192 [“EisnerAmper [] had access to 

the counterparties’ valuations, yet [it] simply ignored that Infinity Q’s valuations were 

significantly higher”]).

• Differences between valuations of “identical positions” held by both the Mutual Fund and 

Hedge Fund, of which EisnerAmper was “privy” (id., ¶¶ 197-202 [describing how Infinity 

Q would negotiate a “single variance swap trade” for both the Mutual Fund and Hedge 

Fund but that “because of Velissaris’s manipulation, the Mutual Fund and Hedge Fund

would have different marks for identical positions”]).

• “[M]athematically impossible” valuations that Infinity Q reported (id., ¶¶ 204-207 

[alleging that Infinity Q “valued variance swaps at a price that would require volatility to 

be below zero for the remainder of its term” but that “because volatility can never be 

negative, these valuations were impossible,” and that this was “another major red flag that 

should have been obvious to those auditing the valuations”]).

• EisnerAmper’s lack of access to “vital information necessary to test the accuracy of Infinity 

Q’s valuation” during its “re-performance” test in which it “attempted to replicate Infinity 

Q’s valuation of the Mutual Fund’s assets” (id., ¶¶ 209-210 [alleging that a senior audit 

manager at EisnerAmper disclosed to government investigators that EisnerAmper “did not 

have access to the corridor values for the Mutual Fund’s corridor swaps,” which were

“necessary to test the accuracy of Infinity Q’s valuation”]).

After the Mutual Fund collapsed in March 2021, shareholders filed class action lawsuits 

related to the collapse of the Mutual Fund, and the parties reached a settlement that the court 

preliminarily approved on October 17, 2022 (In re Infinity Q Diversified Alpha Fund Securities 

Litig., Index No. 651295/2021, NYSCEF Doc. No. 181). Plaintiff determined to opt out of the 

class action settlement and filed the complaint in this action on December 19, 2022 (Complaint, 

NYSCEF Doc. No. 2). Defendants, including EisnerAmper, then moved to dismiss. On May 3, 

2023, after Plaintiff informed Defendants that it intended to amend its complaint as of right, 

Defendants, including EisnerAmper, stipulated to withdraw their pending motions to dismiss 

(Stipulation Withdrawing Motions to Dismiss, NYSCEF Doc. No. 96). 

Plaintiff then filed the amended complaint on May 26, 2023. The amended complaint 

asserts causes of action for violation of sections 11, 12(a)(2), and 15 of the Securities Act of 1933. 

However, the amended complaint only asserts a single cause of action against EisnerAmper, for 

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

5 of 12 [* 5]
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 6 of 12

violation of section 11. Defendants, including EisnerAmper, moved to dismiss the amended 

complaint for failure to state a claim pursuant to CPLR 3211(a)(7), and the court held oral 

argument on the motions to dismiss on November 15-16, 2023.

DISCUSSION

On a motion to dismiss pursuant to CPLR 3211(a)(7), the court must “accept the facts as 

alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, 

and determine only whether the facts as alleged fit within any cognizable legal theory” (Leon v 

Martinez, 84 NY2d 83, 87-88 [1994]; see also Chapman, Spira & Carson, LLC v Helix BioPharma 

Corp., 115 AD3d 526, 527 [1st Dept 2014]).

The court notes that, despite attaching to its motion papers the affirmation of Brian P. 

Morgan (NYSCEF Doc. No. 125) and a number of exhibits referenced therein (NYSCEF Doc. 

Nos. 126-131), EisnerAmper has not moved to dismiss the amended complaint pursuant to CPLR 

3211(a)(1) on the basis of a “defense [] founded upon documentary evidence” (CPLR 3211(a)(1); 

Notice of Motion, NYSCEF Doc. No. 123). Rather, the motion is limited to failure to state a cause 

of action under CPLR 3211(a)(7). Nevertheless, the court may consider documentary evidence 

where it flatly contradicts the plaintiff’s cause of action (see Basis Yield Alpha Fund (Master) v 

Goldman Sachs Group, Inc., 115 AD3d 128, 134-35 [1st Dept 2014]). When a defendant submits 

documentary evidence, the standard shifts from “whether the plaintiff stated a cause of action to 

whether it has one” (id. at 135 [internal citations and quotation marks omitted]; Kaplan v Conway 

& Conway, 173 AD3d 452, 453 [1st Dept 2019] [finding that the motion court “properly 

considered the emails submitted by defendants in dismissing the complaint”]). Therefore, the court 

will consider the documentary evidence that EisnerAmper has submitted.

1. Section 11

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

6 of 12 [* 6]
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 7 of 12

Section 11 of the Securities Act of 1933 allows a purchaser of securities to sue where a 

registration statement “contained an untrue statement of a material fact or omitted to state a 

material fact required to be stated therein or necessary to make the statements therein not 

misleading” (15 USC § 77[k][a]). To state a cause of action under section 11, a plaintiff must 

allege that they “(1) purchased a registered security . . . (2) the defendant participated in the 

offering in a manner specified by the statute; and (3) the registration statement contained an untrue 

statement of a material fact or omitted to state a material fact” (Mahar v General Electric 

Company, 188 AD3d 534, 535 [1st Dept 2020] [internal citation and quotation marks omitted]; 

Hoffman v AT & T Inc., 67 Misc3d 1212(A), *5 [Sup Ct, NY County 2020]).

However, liability under section 11 is limited to discrete categories of defendants, and 

“courts have construed the list strictly” (In re Global Crossing, Ltd. Sec. Litig., 2005 WL 1907005, 

*8 [SDNY Aug 8, 2005]). Section 11 liability may apply to signatories of the registration 

statement, directors or partners of the issuer, whether named in the registration statement or not, 

underwriters, and “every accountant, engineer, or appraiser, or any person whose profession gives 

authority to a statement made by him, who has with his consent been named as having prepared 

or certified any part of the registration statement” (15 USC § 77[k][a]; In re Lehman Brothers 

Securities and Erisa Litig., 131 F Supp 3d 241, 260 [SDNY 2015] [“Accountants may be found 

liable under Section 11 for portions of registration statements that they audited.”]). While liability 

is “virtually absolute” for issuers of securities, “experts such as accountants” are accorded a “due

diligence defense” (In re Wachovia Equity Securities Litigation, 753 F Supp 2d 326, 378-79 

[SDNY 2011] [internal citations and quotation marks omitted] [denying dismissal of section 11 

claim against accountant based on allegedly false audit reports and financial statements that the 

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

7 of 12 [* 7]
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 8 of 12

accountant audited, finding that even though the accountant could ultimately avoid liability based 

on due diligence defense, that was not sufficient on a motion to dismiss]). 

As s preliminary matter, the court rejects EisnerAmper’s argument that its 2019 audit report 

constitutes a non-actionable opinion. In Omnicare, Inc. v Laborers Dist. Council Const. Industry 

Pension Fund (575 US 175 [2015]), the US Supreme Court evaluated when a purported opinion 

can nevertheless be the basis for liability under section 11. The court found that, while section 11 

only creates liability for untrue statements of “fact,” a party can still be held liable for the opinion 

where the party does not sincerely believe the opinion, where the opinion contains “embedded 

statements of fact,” or where opinion “omits material facts about the [] inquiry into or knowledge 

concerning a statement of opinion, and if those facts conflict with what a reasonable investor would 

take from the statement itself” (id. at 183-89; see also In re Pareteum Securities Litig., 2021 WL 

3540779, **13, 21-22 [SDNY Aug 11, 2021]; In re Deutsche Bank AG Securities Litig., 2016 WL 

4083429, *21 [SDNY July 25, 2016]). While Omnicare did not involve an auditor’s opinion, other 

cases citing Omnicare have (see In re Lehman Brothers Securities and Erisa Litig., 131 F Supp 3d 

241, 259-60 [SDNY 2015] [rejecting defendant’s claim that section 11 does not apply to audit 

opinions and finding that “[a]ccountants may be found liable under Section 11 for portions of 

registration statements that they audited”]; In re Petrobras Securities Litig., 2016 WL 1533553, 

*3 [SDNY Feb 19, 2016] [rejecting argument for dismissal based on audit opinions being 

“statements of opinion rather than fact” because “even assuming an auditor’s opinion is to be 

treated the same as the opinions described in Omnicare, that case sets out three avenues of liability 

for statements of opinion under § 11, two of which are adequately alleged here”]). 

Here, even if Plaintiff failed to allege section 11 liability based on its theories that (1) 

financial statements such as those contained in the December 2019 Registration Statement 

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

8 of 12 [* 8]
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 9 of 12

constitute embedded statements of fact or (2) EisnerAmper’s statement of compliance with 

industry standards was a false statement of fact, it would not insulate EisnerAmper from liability. 

Rather, Plaintiff has sufficiently alleged section 11 liability against EisnerAmper based on 

EisnerAmper’s alleged omission of material facts. A plaintiff can succeed on a section 11 

omissions claim by alleging “red flags,” the omission of which would render a statement false or 

misleading (see Lehman, 131 F Supp 3d at 258-59; Pareteum, 2021 WL 3540779, *22). In 

Lehman, the court denied summary judgment as to whether an auditor made false or misleading 

statements, noting that evidence would allow a jury to infer that the auditor had information 

suggesting that Lehman’s balance sheets were misleading (Lehman, 131 F Supp 3d at 258-59). 

Similarly, in Pareteum, the court denied a motion to dismiss a section 11 claim against an 

accountant, finding that “[m]arket letters of short-sellers describ[ing] how Parateum's Backlog was 

dangerously concentrated and of questionable reliability, rais[ed] ‘red flags’ as to the continuing 

reliability of Parateum's revenue and growth” (Pareteum, 2021 WL 3540779, *22). The court 

found sufficient the plaintiff’s allegations that through failing to disclose “if Parateum’s internal 

controls had improved” to assess the accuracy of the growth, “misleading information was 

embedded and further information was necessary to make these figures not misleading” (id.). 

Here, Plaintiff has alleged a number of red flags, the omission of which would render 

EisnerAmper’s audit opinion materially misleading. In particular, the amended complaint alleges 

that “EisnerAmper [] had access to [] counterparties’ valuations, yet [it] simply ignored that 

Infinity Q’s valuations were significantly higher than the counterparties’ valuations” (Amended 

Complaint, ¶¶ 192, 194-95). Even more than mere “access” to information, Plaintiff alleges that 

EisnerAmper actually was aware of these disparate valuations, alleging that the “differences 

between Infinity Q’s valuations and the counterparties’ valuations were discussed during audits of 

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

9 of 12 [* 9]
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 10 of 12

the Mutual Fund,” but that the auditors “simply disregarded the counterparty valuations” (id., ¶¶ 

194-95). Further, the amended complaint alleges at least one specific instance of disparate 

valuations dating back to 2018 (see id., ¶ 193 [describing that Infinity Q provided US Bancorp 

with counterparty brokerage statements from Deutsche Bank in August 2018, whose valuations 

the US Bancorp executive noted “differ[ed] quite a bit” from Infinity Q’s valuations”]). 

In response, EisnerAmper asserts that Plaintiff “fails to identify any such trades” but that 

the “SEC Complaint (the source of Plaintiff’s allegation) makes clear that the trades and positions 

at issue were not audited by EisnerAmper as part of the 2019 Audit Report” (Reply, NYSCEF 

Doc. No. 179, p. 10). It is not clear to which trades from the SEC’s complaint EisnerAmper is 

referring. Further, even if EisnerAmper is correct that Plaintiff learned of some disparate 

valuations through the SEC’s complaint, EisnerAmper has provided the court with no basis for 

holding that the SEC’s complaint is an exclusive summation of all allegations related to Infinity 

Q, and that the absence of an allegation in that complaint means that the court cannot consider that 

allegation here. The amended complaint alleges that EisnerAmper was aware of the red flag of

disparate valuations going back to 2018, even if the SEC’s complaint does not. For purposes of 

this motion to dismiss, these allegations are sufficient (see Pareteum, 2021 WL 3540779, *22 

[holding that “[a]t the pleading stage,” it was sufficient for the plaintiff to allege that, where 

Parateum disclosed “extraordinary growth,” the auditor “had the duty to disclose if Parateum’s

internal controls had improved to assess if [the] continuing growth was accurate and reliable,” and 

that “further information was necessary to make these figures not misleading”]). 

Plaintiff also alleges the red flag of disparate valuations between the Mutual Fund and the 

Hedge Fund for “identical positions” (Amended Complaint, ¶ 197). According to Plaintiff, Infinity 

Q would “negotiate a single variance swap trade and allocate a portion to the Mutual Fund and a 

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

10 of 12 [* 10]
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 11 of 12

portion to the Hedge Fund” but that “because of Velissaris’s manipulation, the Mutual Fund and 

Hedge Fund would have different marks for identical positions” (id., ¶¶ 198-99). The amended 

complaint alleges that EisnerAmper was the auditor for both funds and was “privy to these 

disparate valuations of the exact same positions, but once again turned a blind eye” (id., ¶¶ 201-

02). Further, the amended complaint refers to the SEC’s investigation finding improper valuations 

dating back to 2017 to infer that the disparate valuations of identical positions in the different funds 

dated back to 2017 as well (id., ¶ 203). EisnerAmper responds by asserting that the SEC’s 

complaint “identifies exactly one investment which was equally allocated to the Fund and the 

Private Fund but marked at different values,” and that the purportedly disparate marking was from 

November 2020, after EisnerAmper’s August 31, 2019 audit (Reply, p. 11 [citing SEC Complaint, 

NYSCEF Doc. No. 128, ¶ 161]). The court rejects EisnerAmper’s argument for the same reason 

the court rejected the argument against the counterparty disparate valuations red flag. Namely, 

Plaintiff need not be hamstrung by precisely what the SEC’s complaint alleged.

2 The amended 

complaint alleges that EisnerAmper was aware of the red flag of disparate valuations between the 

Mutual Fund and the Hedge Fund where the valuations—in theory—should have been identical. 

This is sufficient at this stage.

The court has considered the parties’ remaining contentions and finds them unavailing.

Accordingly, it is

ORDERED that EisnerAmper’s motion to dismiss is denied in its entirety; and it is further

2 Regardless, the SEC Complaint appears to refer to the disparate marking that EisnerAmper discusses in its papers as 

an “example” of “widely disparate marks,” plural, rather than the only instance of a disparate marking between the 

Mutual Fund and the Hedge Fund (SEC Complaint, ¶¶ 160-61). 

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

11 of 12 [* 11]
160830/2022 THE GLENMEDE TRUST COMPANY, N.A. vs. INFINITY Q CAPITAL MANAGEMENT 

LLC ET AL

Motion No. 010

Page 12 of 12

ORDERED that EisnerAmper must answer the amended complaint within 20 days of this 

decision and order.

01/31/2024                           

DATE   

                    MELISSA A. CRANE, J.S.C.   

                                   

CHECK ONE:    CASE DISPOSED            x NON-FINAL DISPOSITION           

        GRANTED        x DENIED    GRANTED IN PART        OTHER   

APPLICATION:        SETTLE ORDER                SUBMIT ORDER           

CHECK IF APPROPRIATE:        INCLUDES TRANSFER/REASSIGN        FIDUCIARY APPOINTMENT        REFERENCE   

INDEX NO. 160830/2022

NYSCEF DOC. NO. 203 RECEIVED NYSCEF: 01/31/2024

12 of 12 [* 12]