Texting employees land RIA with $6.5M SEC fine

Texting employees land RIA with $6.5M SEC fine
Multiple incidents of using personal text communications were discovered.
APR 04, 2024

A New York RIA has been charged for “widespread and longstanding failures” relating to electronic communications – and fined $6.5 million.

The Securities and Exchange Commission’s order stated that the firm “violated certain recordkeeping and ethics provisions of the Investment Advisers Act of 1940 and failed to reasonably supervise with a view to preventing and detecting violations.”

The charges against Senvest Management relate to the use of personal texting platforms and other non-Senvest communications channels both internally and externally for communications about company business.

The violations of the firm’s policies and procedures occurred from at least January 2019 through December 2021 and involved employees at various levels of authority. This included one incident where off-channel communication involving three senior employees was on devices where messages were set to auto-delete after 30 days.

Other employees failed to obtain pre-clearance for all securities transactions in their personal accounts, contrary to the firm’s code of ethics.

According to the SEC order, Senvest also “failed to maintain or preserve the off-channel communications as required under the federal securities laws and the firm's policies and procedures.”

“The commission continues to focus on regulated entities’ compliance with the recordkeeping requirements. Adherence to these requirements is essential for the Commission to effectively exercise its regulatory oversight and enforce the federal securities laws,” said Eric Werner, director of the Fort Worth regional office.

Along with 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. The firm must also retain a compliance consultant who will conduct reviews of the firm’s policies and procedures regarding communications found on employees’ personal devices and the framework used for those who are found to be non-compliant.

Senvest Management is a $3 billion AUM RIA founded in 1997 by Richard Mashaal.

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.