The US SEC Charges BlackRock $2.5 Million of Misreporting Reporting Investments

The SEC has charged BlackRock with failing to accurately report substantial investments made by a publicly traded fund that the firm advised. BlackRock has agreed to pay a $2.5 million penalty to settle the charges without admitting or denying the findings.

The SEC’s order, released on October 24, reveals that between 2015 and 2019, BlackRock Multi-Sector Income Trust (BIT) inaccurately described its significant investments in Aviron Group, LLC.

Aviron, a company involved in developing print and advertising plans for a limited number of films annually, played a substantial role in BIT’s portfolio.

However, BlackRock reportedly categorized Aviron as a “Diversified Financial Services” entity in several of BIT’s annual and semi-annual reports.

Furthermore, BlackRock allegedly stated that Aviron paid a higher interest rate than it actually did. BlackRock recognized these discrepancies in 2019 and subsequently corrected its reporting.

The SEC’s investigation was conducted by Salvatore Massa and Brian Fitzpatrick, under the supervision of Andrew Dean and Corey Schuster, all from the Enforcement Division’s Asset Management Unit.

Andrew Dean, Co-Chief of the Enforcement Division’s Asset Management Unit, stressed the importance of accurate disclosures for both retail and institutional investors.

He noted that investors rely on precise information about the companies within a closed-end or mutual fund’s portfolio to make informed investment decisions. Investment advisors are obligated to provide this vital information.

Despite the SEC charges, BlackRock has recently been in the spotlight for different reasons. There are rumors that the global asset manager is considering the launch of its iShares spot Bitcoin ETF.