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