The SEC brought an enforcement action against accounting firm, EisnerAmper, who was engaged as auditor for Infinity Q Diversified Alpha Fund. Infinity Q Investment Adviser was previously charged by the SEC for mispricing the NAV of its public mutual fund and private fund as part of a massive overvaluation scheme. Fund derivative positions predominantly included variance swaps with values tied to measures of volatility. Manager used a third-party Bloomberg pricing service (BVAL), to value the derivative positions, and represented to investors and auditors that BVAL modeled and priced the derivatives independently, without any input from Infinity Q. Infinity Q and its Chief Investment Officer manipulated BVAL valuation models, selected improper valuation models, entered incorrect values and cherry-picked key inputs into the model to inflate fund performance. EisnerAmper was charged with improper professional conduct for 1) not understanding internal controls around valuation process; 2) failing to obtain sufficient evidence when performing valuation testing; and 3) not exercising sufficient professional skepticism in performing its work. The SEC expects external gatekeepers as well as internal compliance teams to confirm valuations are calculated consistent with stated policies, procedures, and disclosures and utilize appropriate “professional skepticism” rather than simply taking the word of investment teams.