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

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.