The Securities and Exchange Commission (SEC) has charged Senvest Management for widespread and longstanding failures to maintain and preserve certain electronic communications.
Senvest Management is a registered investment advisor based in New York, employing investment strategies across approximately $3 billion in assets under management.
Senvest has admitted the facts set forth by the watchdog’s order, acknowledging that its conduct violated the federal securities laws and has agreed to pay a $6.5 million penalty, alongside agreeing to implement improvements to its compliance policies and procedures.
The SEC’s order found that from at least January 2019 until December 2021, Senvest employees at multiple levels of authority communicated about company business internally and externally using personal texting platforms and other non-Senvest messaging applications, in violation of the firm’s policies and procedures.
The advisory firm also failed to maintain or preserve the off-channel communications as required under the federal securities laws.
According to the SEC, in one instance, three senior employees engaged in off-channel communications on personal devices that were set to automatically delete messages after 30 days.
Elsewhere, the order concluded that certain Senvest employees failed to adhere to provisions of the firm’s code of ethics requiring them to obtain pre-clearance for all securities transactions in their personal accounts.
“The Commission continues to focus on regulated entities’ compliance with the recordkeeping requirements,” said Eric Werner, director of the Fort Worth regional office.
“Adherence to these requirements is essential for the Commission to effectively exercise its regulatory oversight and enforce the federal securities laws.”
Alongside the $6.5 million penalty, Senvest was censured and ordered to cease and desist from future violations of the relevant provisions of the federal securities laws.
Senvest also agreed to retain a compliance consultant to conduct comprehensive reviews of its policies and procedures relating to the retention of electronic communications found on personal devices, and the framework for addressing non-compliance by its employees with those policies and procedures.
Last year, US regulators handed out historically high combined penalties for recordkeeping and supervision failures.
Most recently, The Commodity Futures Trading Commission (CFTC) issued an order simultaneously filing and settling charges against Goldman Sachs for violating the cease-and-desist provision of a previous order.