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• A look at Senvest’s SEC fine for lax firm communications

SEC fines Senvest Management, sparking concerns for other funds

By Bob Clair

New York-based hedge fund Senvest Management LLC will pay a $6.5 million penalty levied by the Securities and Exchange Commission last month for failure to maintain records of certain electronic communications.

After an investigation by the SEC, Senvest agreed to retain a compliance consulate to review its policies and procedures for off-channel communications, in addition to the fine. Senvest also agreed to implement improvements to its compliance policies and procedures.

The SEC investigation found that from January 2019 through December 2021, Senvest employees communicated about firm activities using personal texting platforms and other non-Senvest applications in violation of the firm’s policies and procedures. Senvest also failed to maintain or preserve the off-channel communications as required under federal securities laws.

“The Commission continues to focus on regulated entities’ compliance with record-keeping 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 SEC’s Fort Worth Regional Office, which conducted the investigation.

While the SEC’s investigation was confined to Senvest, other large funds, particularly RIAs, have taken note.

Robert Sutton, a partner in the private funds practice at Proskauer Rose, predicts similar investigations will follow.

“I wouldn’t be surprised if we see more of these in the coming months,” Sutton said.

Considering the SEC investigation of Senvest took several years, some believe active investigations of other firms are likely in progress.

“It’s a safe bet,” said David Tang, a partner at the law firm of Dorsey & Whitney, who represents funds managers.

Indeed, some alternative investment firms have confirmed in disclosures that they are the subject of investigations, specifically targeting their record-keeping practices.

Industry observers say the best way for firms to react is to be cooperative and transparent with the SEC if instances of illicit communications are discovered, as fines take into consideration how cooperative a firm is with regulators, according to Joshua Broaded, who leads ACA Group’s regulatory advisory practice.

One executive at Insight Partners who did not want to be named said that although he does not believe his firm has done anything wrong, internal efforts are being made to ensure that there hasn’t been any inadvertent wrongdoing.

“We’re doing a self-audit right now. As far as I know, nothing wrong has been found, but obviously, we don’t want any surprises,” the executive said. “I’m sure other firms are doing the same thing. No one ever wants to be cited by the SEC. It’s not good for business.”

Speaking on condition of anonymity, an investment professional at a middle market buyout firm noted that the SEC takes issue not only with text message communications but also with standard workplace chat platforms like Microsoft Teams and Slack—if the proper archival procedures aren’t in place.

Implementing such record-keeping can be surprisingly complex for general-purpose communications tools not built with the SEC in mind. At the same time, policing these channels can be challenging, especially for firms trying to break ingrained staff communications behaviors as they work to return to compliance.

Firms hoping to slip under the radar may unknowingly be taking on substantial risk. Text and chat communications can receive intense scrutiny from the SEC as part of its standard audit, according to professionals who have experienced the process.

• TenneT, the Dutch government-owned grid operator, is considering the sale of its German operations, which could be worth up to €25 billion.

• WM (NYSE: WM) is exploring a sale of its renewable natural gas business, which could be worth around $3 billion, and has hired JPMorgan to advise.

• General Atlantic and CPPIB are considering a €3 billion offer for idealista, Spain's largest online real estate classifieds marketplace owned by EQT.

• Crescent Energy, a portfolio company of KKR, agreed to acquire SilverBow Resources, an oil and gas producer, for $2.1 billion.

• Roark Capital is considering the sale of Primrose Schools, an early childhood education franchisor, which could be worth nearly $2 billion, per Reuters

• Aflac Global Investments, the asset management subsidiary of Aflac (NYSE: AFL), has agreed to acquire a 40 percent stake in Tree Line Capital Partners, a San Francisco-based direct lender focused on the lower middle market.

• Cloud Software Group, formed by the combination of Citrix Systems and Tibco Software and backed by Elliott Investment Management and Vista Equity Partners, is exploring the sale of ShareFile, a content-collaboration platform, which could be valued at around $1.5 billion, per Bloomberg.

• Johnson & Johnson agreed to acquire Proteologix, a biotech focused on bispecific antibodies for immune-mediated diseases, for $850 million in cash, plus an additional contingent consideration.

• Chevron is preparing to sell its remaining UK North Sea oil and gas assets, including a 19.4 percent stake in the BP-operated Clair oilfield.

• Figma, a cloud-based design platform, is offering to allow employees and early investors to sell stakes to new and existing investors at a $12.5 billion valuation, following the collapse of its $20 billion acquisition by Adobe due to regulatory scrutiny.

• Snowflake (NYSE: SNOW) is in talks to acquire Reka AI, an LLM startup, for more than $1 billion, per Bloomberg.

• Brookfield Asset Management is planning to invest around $500 million for a majority stake in Leap Green Energy, an Indian renewable energy provider.

• MBK Partners is considering the sale of Shanghai Siyanli Industrial Co., a Chinese spa and beauty clinic operator, which could be valued at several hundred million dollars, per Bloomberg.

• Blackstone Growth agreed to acquire a majority stake in Priority Software, a provider of mission-critical ERP software, from existing investors TA Associates and Fortissimo Capital.

• American International Group (NYSE: AIG) agreed to sell a 20 percent stake in Corebridge Financial (NYSE: CRBG), a provider of retirement products, to Nippon Life Insurance Company for $3.8 billion.

• Khazanah Nasional, Employees Provident Fund, Global Infrastructure Partners, and ADIA are jointly bidding to acquire the remaining 67 percent stake not already owned in Malaysia Airports Holdings, an operator of 39 airports across Malaysia and Turkey, at a valuation of around $3.9 billion.

• Bishop Lifting, a portfolio company of Altamont Capital Partners, acquired Oceanside Equipment, a distributor of rigging and mooring products based in Dartmouth, Nova Scotia.

• GrubMarket agreed to acquire Butter, a SaaS platform that digitizes the food distribution process.

• CallRevu, a portfolio company of Serent Capital, agreed to acquire TotalCX, a call management platform.

• Dessert Holdings, a portfolio company of Bain Capital, acquired Kenny's Great Pies, a manufacturer of cream-based pies, from Kaho Partners.

• Hansons, a portfolio company of Huron Capital, agreed to acquire Paramount Builders, a home repair provider based in Virginia Beach, Virginia.

• IRIS Software Group, backed by Leonard Green & Partners and Hg, agreed to acquire Swipeclock, a provider of cloud-based workforce management solutions.

• LogRhythm, backed by Thoma Bravo, entered into a merger agreement with security intelligence firm Exabeam.

• Mill Point Capital agreed to acquire a majority stake in iQor, a managed services provider of tech-enabled business process outsourcing solutions.

• The Watermill Group invested in Musser Lumber, a producer of premium dried hardwood fiber.

• Rubicon Technology Partners invested in Nulogy, a provider of supply chain collaboration solutions.

• Commercial Bakeries Corp., a portfolio company of Graham Partners, acquired Imagine Baking, a Sandusky, OH-based manufacturer of specialty health-conscious baked goods.

• OneStream, a corporate performance management software platform backed by KKR, confidentially filed for an IPO that could value the business at up to $6 billion, per Bloomberg.

Tech, Vertical SaaS, & Misc. Enterprise

• Vercel, a web development and cloud deployment platform, raised $250 million in new funding at a $3.25 billion valuation. Accel led, with participation from GV, CRV, Notable Capital, Tiger Global, 8VC, Bedrock, SV Angel, and Geodesic Capital.

• Sigma, a business intelligence startup, raised $200 million in Series D funding led by Spark Capital and Avenir Growth Capital, with participation from NewView Capital, Snowflake Ventures, Altimeter Capital, Sutter Hill Venture, XN Ventures, and D1 Capital.

• Weka, developer of cloud-based AI data infrastructure, raised $140 million in Series E funding at a $1.6 billion valuation. Valor Equity Partners led the round, with participation from NVIDIA, Generation Investment Management, and Atreides Management.

• Alkira, developer of a cloud-focused networking platform, raised $100 million in Series C funding led by Tiger Global, with participation from Dallas Venture Capital, Geodesic Capital, NextEquity Partners, Kleiner Perkins, Sequoia Capital, and Koch Disruptive Technologies.

• PolyAI, an AI-powered voice assistant platform, raised $50 million in Series C funding co-led by Hedosophia, NVentures, and Zendesk led, with participation from Khosla Ventures, Point72 Ventures, and Sands Capital.

• Hatch, an HR platform designed for employers of outsourced talent, raised $50 million in new Series C funding. Tiger Global led, with participation from GGV Capital, Silicon Valley Bank, and Verlinvest.

• Steno, a court reporting and legal services platform, raised $46 million in new funding led by Left Lane Capital.

• Humanity Protocol, a developer of biometrics-based decentralized identity services, raised $30 million in seed funding at a $1 billion valuation. Kingsway Capital led, with participation from Animoca Brands, Blockchain.com, and Shima Capital.

• Voxel51, a developer of visual AI models, raised $30 million in Series B funding. Bessemer Venture Partners led, with participation from Tru Arrow Partners, Drive Capital, Top Harvest Capital, Shasta Ventures, and ID Ventures.

• Enspired, an AI-based power trading company, raised €25.5 million in Series B funding. Zouk Capital led the round, with participation from PUSH VC, Banpu NEXT, Vopak Ventures, Presidio Ventures, Emerald Technology, Helen Ventures, 360 Capital, and EnBW New Ventures.

• CoLab Software, a provider of cloud-based collaborative engineering design review software, raised $21 million in Series B funding. Insight Partners led, with participation from Y Combinator, Killick Capital, and Pelorus VC.

• Harbor Lab, provider of port cost management software, raised $16 million in Series A funding. Atomico led, with participation from Notion Capital, Venture Friends, SpeedInvest, The Dock, Endeavor Catalyst, and TMVentures.

• Recall.ai, a developer of infrastructure for conversational AI, raised $10 million in Series A funding led by Ridge Ventures, with participation from Industry Ventures, Y Combinator, IrregEx, Bungalow Capital, and Hack VC.

• Caeli Wind, a wind turbine location detection and AI contract broker, raised €11 million in new funding from Notion Capital, Santander, and HTGF.

• GoodShip, a freight network orchestration and procurement platform, raised $8 million in Series A funding led by Bessemer Venture Partners, with participation from Ironspring Ventures, Chicago Ventures, FUSE VC, Cercano Management, and 53 Stations.

• Malted AI, an AI model distillation platform, raised £6 million in seed funding from Hoxton Ventures and Creator Fund.

Fintech

• Cover Genius, an embedded insurance provider, raised $80 million in Series E funding led by Spark Capital. Existing investors Dawn Capital, King River Capital, and G Squared also participated.

• Agora, an estate management platform, raised $34 million in Series B funding. Qumra Capital led, with participation from Insight Partners and Aleph.

• PayHOA, a homeowner association management platform, raised $27.5 million in Series A funding led by Elephant.

• Aeropay, an open banking and pay-by-bank provider, raised $20 million in Series B funding led by Group 11, with participation from Chicago Ventures and Continental Investment Partners.

• Yendo, a vehicle-secured credit card startup, raised $15 million in equity funding from FPV ventures and $150 million in debt financing from i80 Group.

Consumer & Media

• Restaurant365, a restaurant management software platform, raised $175 million in new funding led by Iconiq Growth, with participation from KKR and L Catterton.

• Annuity.com, a provider of consumer services and education for annuities, raised $15.7 million in seed funding led by Gregory FCA.

Healthcare

• Ubiquity Bio, a biotech targeting immune-mediated diseases, raised $300 million in new funding from Blackstone Life Sciences.

• Nabla Bio, a biotech focused on generative protein design, raised $26 million in Series A funding led by Radical Ventures, with participation from Khosla Ventures and Zetta Venture Partners.

• Fay, a platform for independent dietitian practices, raised $25 million in Series A funding led by General Catalyst and Forerunner Ventures, with participation from 1984, Grow Therapy, and Maven Clinic's founders.

• Watershed Health, a developer of shared patient records and real-time care coordination software, raised $13.6 million in new funding led by First Trust Capital Partners, with participation from FCA Venture Partners, Create Health Ventures, Impact Engine, 450 Ventures, LDH Ventures II, MassMutual Ventures, Capstar Partners, and Wanxiang Healthcare Investments.

• Acclinate, a diverse clinical trials startup, raised $7 million in Series A funding. Cencora Ventures led, with participation from Labcorp and Latimer Ventures.

• Phenomix Sciences, a biotech developing precision medicine therapies for obesity, raised $5.5 million in new funding from Dexcom, Labcorp, and Health2047.

Industrials, Greentech, & Other

• Cylib, a sustainable battery recycler, raised €55 million in Series A funding led by World Fund and Porsche Ventures, with participation from Bosch Ventures, DeepTech & Climate Fonds, and NRW.Venture.

• Orange Charger, a developer of EV charging solutions, raised $6.5 million in seed funding led by Munich Re and Climactic, with participation from Baukunst, Lincoln Property Ventures, Crow Holdings, and Space Cadet Ventures.

• Leonard Green & Partners is raising $1.5 billion for its debut general partner-led secondaries fund.

• Peakbridge raised $187 million for its second growth fund.

• Accion raised $153 million for a new fund focused on emerging markets financial institutions investments.

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