The U.S. Securities and Exchange Commission has fined BlackRock Advisors $2.5 million for failing to accurately describe investments in the entertainment industry that constituted a significant portion of a publicly traded fund it managed.
According to a filing with the SEC, between 2015 and 2019, BlackRock Multi-Sector Income Trust (BIT) made substantial investments in a print and advertising company called Aviron Group that worked on one to two films annually via a loan facility.
The SEC alleged that BlackRock incorrectly identified Aviron as a provider of “Diversified Financial Services” in several BIT’s publicly available annual and semi-annual investor reports.
In addition, the SEC alleged that BlackRock misrepresented Aviron’s interest rate as being higher than it was. Nonetheless, the asset manager uncovered these errors in 2019 and updated information about Aviron’s investments in subsequent years.
Andrew Dean, co-chief of the asset management unit of the SEC’s enforcement division, stated that investment advisers have a responsibility to provide accurate vital information regarding the assets of the funds they manage, and “BlackRock failed to do so with the Aviron investment.”
BlackRock consented to pay the incorrect investment disclosure agreement’s $2.5 million penalty. The world’s largest asset manager has been in the crypto spotlight for its proposed spot Bitcoin exchange-traded fund (ETF), even though the investment was unrelated to the crypto ecosystem.
The SEC’s allegations against BlackRock for investment discourse failure occurred on the same day that its spot Bitcoin exchange-traded fund (ETF) was spotted on the Depository Trust & Clearing Corporation (DTCC) listing, leading many to believe that the spot Bitcoin approval is imminent.
Senior Bloomberg ETF analyst Eric Balchunas described the DTCC listing as “all part of the process” of bringing a cryptocurrency ETF to market. However, within hours of the DTCC listing, the spot Bitcoin ETF was removed from the platform and relisted, confusing the cryptocurrency community.
Nevertheless, a DTCC representative later verified that the iShares Bitcoin ETF has been listed on the platform since August and stated that the listing needs to be more indicative of regulatory approval.