SEC Charges Senvest with Recordkeeping Failures in Latest "Off-Channel" Case

SEC Charges Advisory Firm Senvest Management with Recordkeeping and Other Failures

The Securities and Exchange Commission today announced charges against registered investment adviser Senvest Management LLC for widespread and longstanding failures to maintain and preserve certain electronic communications. The SEC also charged Senvest with failing to enforce its code of ethics. To settle this matter, Senvest admitted the facts set forth in the Commission’s order, acknowledged that its conduct violated the federal securities laws, and agreed to pay a $6.5 million penalty and to implement improvements to its compliance policies and procedures.

According to the Commission’s order, from at least January 2019 through December 2021, Senvest employees at various levels of authority communicated about company business internally and externally using personal texting platforms and other non-Senvest messaging applications in violation of the firm’s policies and procedures. 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. In one instance, three senior employees engaged in off-channel communications on personal devices that were set to automatically delete messages after 30 days. Additionally, the order finds that certain Senvest employees failed to adhere to provisions of the firm’s code of ethics requiring them to obtain pre-clearance for all securities transactions in their personal accounts.

Remarks at SEC Speaks 2024 — Gurbir Grewal

At the same time, we’ve been accused of picking winners and losers, stifling innovation, and driving crypto businesses to more favorable, foreign jurisdictions, wherever they may be.

A decade’s worth of verbal gymnastics that are just a backhanded way of saying, “we want a different set of rules than those that apply to everyone else.”

A decade’s worth of arguments that have served as nothing more than a distraction from the very real issues and risks that the crypto markets present for the investing public.

And most importantly, a decade’s worth of arguments that have been serially rejected in one way or another by court after court. As we have consistently maintained, and as court after court has confirmed, the federal securities laws apply equally to everyone. You don’t get your own rules.

Indeed, as one federal court recently stated, “the ‘crypto’ nomenclature may be of recent vintage, but the challenged transactions fall comfortably within the framework that courts have used to identify securities for nearly eighty years.” The court went on to observe that “[u]sing enforcement actions to address crypto-assets is simply the latest chapter in a long history of giving meaning to the securities laws through iterative application to new situations.”

For Crypto, the Global Regulatory ‘Olympics’ Has Already Begun

Among financial jurisdictions there’s a similar sort of multidisciplinary competition already underway. In this race, however, jurisdictions are competing for the prize of becoming capital to the next generation of financial services: tokenized finance operating in open and decentralized systems. Like the pentathlon, the winners will demonstrate an ideal blend of strength, agility and speed.

Contestants include established financial hubs like London, New York and Hong Kong, which dominated the pre-digital era. But hungry challengers — E.U. member states, the United Arab Emirates (UAE), Singapore, Bermuda and California — are also in the race.

Remarks at SEC Speaks 2024 — Sanjay Wadhwa

Since December 2021, the Commission has charged nearly 60 firms – investment advisers, broker-dealers, and credit ratings agencies – with recordkeeping violations, resulting in combined penalties of just over $1.7 billion. This initiative has received a great deal of attention, much of it focused on penalties, which were as high as $125 million for some of the firms, while, on the lower end of the spectrum, one firm paid a $2.5 million penalty.

Perhaps as a result of that wide range in penalties, there has been a critique from the defense bar that we’re picking numbers at random; that they’re not informed by individualized determinations. I’m here to disabuse you all of that perception: stated simply, we do make an individualized assessment of each firm. I’ll share some of the factors we focus on….

OneCoin Executive Irina Dilkinska Sentenced to 4 Years Over Crypto Scam

The former head of legal and compliance for the phony cryptocurrency OneCoin was sentenced to four years in prison after admitting she helped launder hundreds of millions of dollars in proceeds from the scam.

Irina Dilkinska, 42, pleaded guilty in November to wire fraud and money-laundering conspiracy charges. US District Judge Edgardo Ramos on Wednesday declined her request to avoid prison and return home to Bulgaria to care for her two small children.

Calling her “a woman of great intelligence and a woman who ought to have known better,” Ramos also ordered Dilkinska to pay $118.4 million in restitution. She faced as much as 10 years behind bars under federal sentencing guidelines.

2 Brothers in Trump Media Insider-Trading Scheme Plead Guilty

Two brothers from Miami pleaded guilty on Wednesday in federal court in Manhattan for their role in a nearly $23 million insider-trading scheme surrounding the 2021 announcement that former President Donald J. Trump’s social media company planned to merge with a cash-rich shell company.

Michael and Gerald Shvartsman, who had pleaded not guilty to securities fraud charges last summer, were set to go on trial later this month. But the brothers decided this week to forgo a trial, instead entering their guilty pleas before Judge Lewis J. Liman of U.S. District Court for the Southern District of New York.

Binance Executive’s Nigeria Case Is Adjourned Until April 19

A Binance Holdings Ltd. executive detained for more than a month in Nigeria on tax evasion charges had his case adjourned until April 19 after his first appearance in court.

Tigran Gambaryan, head of financial crime compliance at Binance, was accused alongside the company of charges including non-payment of value-added-tax and company income tax, and complicity in aiding customers to evade taxes through its platform. He’ll remain in the custody of Nigeria’s Economic and Financial Crimes Commission.