Investment firm BlackRock has settled a lawsuit by the US Securities and Exchange Commission (SEC), which accused it of providing inaccurate information. BlackRock paid a fine of $2.5 million.
According to the regulator’s charges, between 2015 and 2019, BlackRock’s Multi-Sector Income Trust (BIT) invested in the film company Aviron Group, LLC. The department alleges that BlackRock failed to accurately describe its investments in the entertainment industry, misrepresenting Aviron as a “diversified financial services” company. BlackRock also falsely stated that Aviron paid a higher interest rate than it actually was, the SEC noted.
In 2019, BlackRock acknowledged these discrepancies and amended its disclosure materials to accurately reflect the financial data for its investment in Aviron. BlackRock did not agree with or deny the SEC’s allegations. The Wall Street giant agreed to settle the regulator’s claims and paid a fine of $2.5 million.
“Retail and institutional investors rely on accurate information about companies when reviewing a closed-end or mutual fund’s investment portfolio. These details are important when making investment decisions. Investment advisers are required to provide this information, and BlackRock failed to do so with its Aviron investment,” said Andrew Dean, SEC enforcement chief.
This is not the first time the SEC has brought charges against BlackRock. In 2015, the agency fined BlackRock Advisors $12 million for failing to disclose conflicts of interest, and in 2017 the company was ordered to pay $340,000 for misuse of separation agreements.
The regulator’s latest allegations come as BlackRock awaits the SEC’s review of its bid to launch a Bitcoin-linked spot ETF. If approved, this investment product will be available for the first time in the US market. A few days ago, BlackRock filed an updated application to convert its Grayscale Bitcoin Trust (GBTC) into a Bitcoin ETF.
