Advisory Firm Atom Investors, Charged with Recordkeeping Violations, Avoids Civil Penalty Because of Self-Reporting, Substantial Cooperation, and Prompt Remediation

The Securities and Exchange Commission today announced charges against Texas-based registered investment adviser Atom Investors LP for its failure to maintain and preserve off-channel communications in violation of the recordkeeping provisions of the federal securities laws. The Commission did not impose a penalty because Atom Investors self-reported the conduct, promptly remediated the violations, and provided substantial cooperation to Commission staff in an investigation of another entity. According to the order, in 2021, the Commission staff issued a subpoena to Atom Investors for documents in connection with an investigation into a third party. In responding to the subpoena, Atom Investors discovered that, over a more than three-year period, it had failed to preserve records subject to the recordkeeping requirements of the federal securities laws, including records that were responsive to the Commission staff’s subpoena.