Global fund manager BlackRock has agreed to settle charges by the U.S. Securities and Exchange Commission (SEC) by paying a fine of $2.5 million.
The SEC alleged that BlackRock failed to accurately describe its investments in the entertainment industry, specifically in film company Aviron Group, LLC.
The settlement comes as BlackRock awaits the SEC’s review of its application for a Bitcoin exchange-traded fund (ETF). If approved, this would be the first such product in the U.S.
The SEC’s allegations involve BlackRock’s Multi-Sector Income Trust (BIT), which made investments in Aviron Group from 2015 to 2019. BlackRock described Aviron as a “Diversified Financial Services” company, a characterization the SEC refutes.
Andrew Dean, Co-Chief of the Enforcement Division’s Asset Management Unit, emphasized the importance of accurate disclosures for retail and institutional investors, stating that BlackRock failed to provide this vital information.
The SEC also alleges that BlackRock falsely claimed that Aviron paid a higher interest rate than was the case. However, BlackRock identified these inaccuracies in 2019 and accurately reported the Aviron investment subsequently.
BlackRock’s pending Bitcoin ETF application has kept the crypto industry on edge. Previously, the SEC has denied all Bitcoin ETF applications, citing market manipulation concerns. However, market analysts believe BlackRock’s position in financial markets and its strong record with ETF applications could turn the tide.
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