Senvest Management, an investment adviser based in New York City, has agreed to pay a $6.5 million penalty to settle charges by the U.S. Securities and Exchange Commission that the firm failed to maintain and preserve electronic communications required by law and to enforce its own code of ethics.
According to the SEC, Senvest “acknowledged that its conduct violated the federal securities laws” and agreed “to implement improvements to its compliance policies and procedures.”
An SEC administrative order issued Wednesday said that, from at least the beginning of 2019 through the end of 2021, “Senvest employees at various levels of authority communicated about Senvest-related business internally and externally using personal texting platforms and other non-Senvest electronic communication services.” Use of such “off-channel communications,” the order said, violated the firm’s policies and resulted in the firm’s failing to preserve communications it was required to keep under federal law.
Further, the order said, “Senvest supervisors, who were responsible for preventing such conduct by junior employees and for implementing the firm’s policies and procedures, also discussed Senvest business using off-channel communications. For example, three senior employees engaged in such discussions on personal devices set to automatically delete messages after 30 days,” which prevented the firm from recovering certain messages it was required by law to maintain.
Through a spokesperson, Senvest declined to comment on the order and penalty.
The SEC’s investigation was conducted by Tom Keltner, Jaime Marinaro, and Jeaneen Kappell of the SEC’s Fort Worth regional office under the supervision of Timothy McCole, assistant SEC director in Washington, D.C., Eric Werner, director of the agency’s Fort Worth regional office, and B. David Fraser, associate director of the Fort Worth office.
Werner said in a written statement: “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.” He and other SEC officials declined to comment further.
Representing Senvest in the matter are Craig Warkol of Schulte Roth & Zabel in New York and Andrew Ceresney of Debevoise & Plimpton in New York.
According to its website, Senvest Management, founded in 1997, manages about $3 billion in assets. It maintains offices in New York, Los Angeles, Miami, Montreal, and Big Sky, Montana.
The SEC order is at found at SEC Administrative Proceeding 3-21900.