US SEC fines Blackrock $2.5m

The United States Securities and Exchange Commission (SEC) has imposed a $2.5 million fine on investment adviser BlackRock Advisors, alleging that the company inaccurately described investments in the entertainment industry within a publicly traded fund it managed.

According to the SEC’s filing, between 2015 and 2019, the BlackRock Multi-Sector Income Trust (BIT) made substantial investments in a print and advertising business called Aviron Group, which was involved in producing one to two films annually through a loan facility.

The SEC claimed that BlackRock incorrectly characterised Aviron as a company providing “Diversified Financial Services” in several of BIT’s annual and semi-annual reports that were publicly available to investors. Additionally, BlackRock was alleged to have misrepresented Aviron’s interest rate, stating it was higher than it actually was. However, BlackRock identified these errors in 2019 and subsequently corrected the information about Aviron’s investment in the following years.

Andrew Dean, co-chief of the SEC’s enforcement division’s asset management unit, stated that investment advisers have a responsibility to provide accurate and essential information about the assets of the funds they manage, and “BlackRock failed to do so with the Aviron investment.”

While this case pertains to investment disclosure and is unrelated to the cryptocurrency ecosystem, it is noteworthy that BlackRock has been actively involved in the crypto space, particularly for its proposed spot Bitcoin exchange-traded fund (ETF).

It is interesting to note that the SEC’s charges against BlackRock for investment disclosure issues coincided with the listing of its spot Bitcoin ETF on the Depository Trust & Clearing Corporation (DTCC). This listing led some to speculate that the approval of the spot Bitcoin ETF was imminent.

However, the listing and subsequent removal of the spot Bitcoin ETF from the DTCC platform created confusion within the cryptocurrency community. A DTCC spokesperson later clarified that the iShares Bitcoin ETF had been listed on the platform since August and that the move did not indicate any regulatory approval.