The U.S. Securities and Exchange Commission (SEC) has fined BlackRock Advisors LLC, the world’s largest asset manager, with a $2.5 million penalty for inaccurate investment disclosures.
The SEC charges relate to BlackRock’s investments in Aviron Group, an entertainment firm, from 2015 to 2019.
BlackRock Neither Admits Nor Denies SEC Findings
BlackRock, which manages over $9.43 trillion worth of assets as of Q2 2023, inaccurately described Aviron to investors and regulators, according to the SEC. The asset manager reported Aviron, an ad planner for films, as a “Diversified Financial Services” company, overstating the interest rate.
Andrew Dean, co-chief of the Enforcement Division’s Asset Management Unit at the SEC, said:
“Retail and institutional investors rely on accurate disclosures of the companies that make up a closed-end or mutual fund’s portfolio to evaluate a current or prospective investment in the fund. Investment advisers have a responsibility to provide this vital information, and BlackRock failed to do so with the Aviron investment.”
In addition, the SEC’s order underscored the fact that BlackRock had identified these inaccuracies in 2019. Subsequently, they accurately reported the Aviron investment in all ensuing reports. Without admitting guilt, BlackRock accepted the SEC’s order, including a cease-and-desist, censure, and monetary penalty.
SEC Plays Hardball
This case marks a significant development in the SEC’s ongoing efforts to enforce accurate investment disclosures. BlackRock’s penalty highlights the need for transparency in investment management and the ramifications of providing inaccurate information.
Largest asset managers worldwide as of March 2022, by value of managed assets. Source: Statista
In related news, BlackRock’s iShares Bitcoin Trust (IBTC) has reappeared on the Depository Trust & Clearing Corporation website. It has been listed since August, according to a DTCC spokesperson. The addition of securities to the National Securities Clearing Corporation (NSCC) security eligibility file by DTCC is a standard step before launching a new ETF.
The list includes both active and potential ETF securities.
An ETF’s appearance on the list means an agent bank has requested a DTCC identifier for it, and DTCC may process the transaction post SEC approval. However, this doesn’t imply any outcome regarding pending regulatory approvals for the ETF.
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