On Wednesday, the Securities and Exchange Commission (SEC) announced it had charged investment advisor Senvest Management LLC for widespread and longstanding recordkeeping failures.
The SEC also charged Senvest with failing to enforce its code of ethics. Senvest has admitted to the facts in the Commission’s order, and agreed to pay a $6.5 million penalty as well as implement compliance policy and procedure improvements.
“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.
According to the SEC, from at least January 2019 through December 2021, Senvest employees communicated internally and externally using personal texting platforms and other non-Senvest messaging applications in violation of the firm’s policies and procedures. Additionally, Senvest failed to maintain or preserve the off-channel communications as required under federal securities laws and the firm’s policies and procedures. The SEC also found that Senvest employees failed to adhere to the firm’s code of ethics that required them to obtain pre-clearance for all securities transactions in their personal accounts.
The SEC also found that Senvest violated recordkeeping and ethics provisions of the Investment Advisers Act of 1940 and failed to supervise with a view to preventing and detecting violations. Senvest was censured and ordered to cease and desist from future violations of the relevant provisions of federal securities laws. The firm also agreed to retain a compliance consultant to conduct a comprehensive review of electronic communications retention policies and procedures.