Senvest Charged $6.5M by SEC for Off-Channel Communications
Senior employees at Senvest were charged for using personal devices with auto-delete features to discuss matters covered by the securities laws.
The Securities and Exchange Commission imposed a $6.5 million penalty on Senvest Management LLC, an advisory firm, for recordkeeping violations related to off-channel communications. The firm will also be required to retain a compliance consultant.
New York-based Senvest acknowledged the violations of federal securities laws and the factual findings of the SEC’s order. The SEC found that from January 2019 through December 2021, Senvest employees, including senior officers charged with training and supervising others, used personal devices to discuss Senvest’s advisory business.
The SEC also found that Senvest failed to save the off-channel communications, violating both the securities laws and the firm’s own policies. According to the SEC, “three senior employees engaged in off-channel communications on personal devices that were set to automatically delete messages after 30 days.” The SEC was able to prove that many of these deleted messages were related to Senvest’s business by matching the conversations with messages from the devices of other employees.
The SEC added that by “failing to maintain and preserve required records relating to its business, Senvest likely deprived the Commission of these off-channel communications in response to the Commission’s requests and subpoenas.”
As part of remediation, Senvest acquired business phones for its employees that automatically archive their communications.
The SEC’s order also requires Senvest to retain a compliance consultant approved by the SEC. The consultant will conduct a 120-day review of Senvest’s communications policies and procedures, training and employee surveillance. The consultant will also conduct a one-year review of Senvest to be sure that Senvest has properly implemented those policies such that they remain compliant.