The U.S. Securities and Exchange Commission (SEC) has accused BlackRock, one of its most prominent investment advisors, of failing to accurately disclose investments made by a publicly traded fund it advised.
It was stated that the amount of investments in question was significant and related to the entertainment industry. BlackRock agreed to resolve the charges by paying a $2.5 million penalty.
BlackRock Multi-Sector Income Trust (BIT) made significant investments through a credit facility in Aviron Group, LLC from 2015 to 2019, the SEC said. Aviron Group is known as a company that develops print and advertising plans for one to two films per year. However, in many of BIT's public annual and semi-annual reports filed with the SEC, BlackRock incorrectly described Aviron as a “Diversified Financial Services” company.
Additionally, BlackRock stated that Aviron was paying a higher interest rate than it actually was.
Andrew Dean, Co-Chief of the SEC Enforcement Division's Asset Management Unit, stated that both individual and institutional investors rely on accurate disclosures regarding the companies that make up the closed-end or mutual fund's portfolio when evaluating their current or potential investments in the fund.
BlackRock consented to the SEC's determination that it violated the Investment Advisers Act of 1940 and the Investment Company Act of 1940. BlackRock agreed to a cease and desist order and a reprimand in addition to the fine, without admitting or denying the SEC's findings.
*This is not investment advice.
