The United States Securities and Exchange Commission (SEC) has imposed a $2.5 million fine on BlackRock Advisors, one of the world’s largest investment advisers, over allegations of inaccurate descriptions of investments in the entertainment industry within a publicly traded fund under its management.
The SEC’s filing revealed that between 2015 and 2019, the BlackRock Multi-Sector Income Trust (BIT) made significant investments in Aviron Group, a print and advertising business involved in producing one to two films annually through a loan facility.
The SEC’s accusation centers on the claim that BlackRock inaccurately categorized Aviron as a company providing “Diversified Financial Services” in multiple annual and semi-annual reports of BIT, which were made publicly available to investors. Additionally, BlackRock was alleged to have misrepresented Aviron’s interest rate, reporting a higher rate than what was accurate. However, the asset management firm recognized these errors in 2019 and subsequently corrected the information related to Aviron’s investment.
Andrew Dean, co-chief of the SEC’s enforcement division’s asset management unit, emphasized the obligation of investment advisers to provide accurate and crucial information regarding the assets of the funds they oversee, stating that “BlackRock failed to do so with the Aviron investment.”
To resolve the matter, BlackRock has agreed to pay the $2.5 million penalty as part of a settlement related to the misleading investment disclosures. While the case at hand does not directly pertain to the cryptocurrency ecosystem, BlackRock has been under the spotlight for its proposed spot Bitcoin exchange-traded fund (ETF).
Interestingly, the SEC’s charges against BlackRock for failing to provide accurate investment disclosures coincided with the discovery of its spot Bitcoin ETF listed on the Depository Trust & Clearing Corporation (DTCC) platform. This raised speculations that regulatory approval for the spot Bitcoin ETF might be imminent.
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Eric Balchunas, a senior Bloomberg ETF analyst, viewed the DTCC listing as a routine step in the process of bringing a crypto ETF to the market. However, shortly after the spot Bitcoin ETF was listed, it was temporarily removed and later reappeared, causing confusion within the cryptocurrency community. Nevertheless, a DTCC spokesperson clarified that the iShares Bitcoin ETF had been listed on the platform since August and that the listing’s temporary removal did not signify any regulatory approval or disapproval.
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