In a recent development, the United States Securities and Exchange Commission (SEC) has imposed a substantial fine of $2.5 million on BlackRock Advisors. The penalty stems from BlackRock’s failure to accurately disclose its investments in the entertainment industry within a publicly traded fund it managed.
Between 2015 and 2019, the BlackRock Multi-Sector Income Trust (BIT) made a significant loan facility investment in the print and advertising company Aviron, known for its involvement in producing one to two films annually, according to the SEC’s filing.
The SEC investigation revealed that BlackRock had misrepresented Aviron as a provider of “Diversified Financial Services” in multiple BIT annual and semi-annual reports available to investors. Furthermore, BlackRock was found to have inaccurately reported Aviron’s interest rate, falsely portraying it as higher than it actually was. These discrepancies were discovered by BlackRock in 2019, and subsequent reports accurately reflected the Aviron investment.
Andrew Dean, co-chief of the enforcement division’s asset management unit at the SEC, emphasized, “BlackRock failed to deliver precise vital information about the assets of the fund managed, especially concerning the Aviron investment.”
In response to this erroneous investment disclosure, BlackRock has agreed to pay the hefty $2.5 million fine. This incident comes amidst BlackRock’s increasing involvement in the cryptocurrency sector, particularly with its proposed iShares Spot Bitcoin ETF’s listing on the Depository Trust & Clearing Corporation (DTCC), garnering significant attention from investors and industry experts alike. Stay tuned for more updates on this evolving financial landscape.
