SEC Slams BlackRock with $2.5M Fine for Investment Misconduct

• Investment company BlackRock has been fined by the United States Securities and Exchange Commission (SEC).
• The SEC accused the company of failing to comply with investment disclosure regulations.
• BlackRock will enter into a resolution process with the commission.

Throughout 2023, the United States Securities and Exchange Commission (SEC) has intensified its regulatory grip on the cryptocurrency industry, imposing sanctions on various exchanges and firms. 

The actions have left almost no entities untouched by the SEC’s watchful eye, and the latest addition to their list of targets is investment company BlackRock.

BlackRock’s Alleged Violations

In an official document, the U.S. Securities and Exchange Commission alleged that BlackRock inaccurately described investment offers comprising a significant portion of a publicly traded fund it advised in the entertainment industry, violating the Investment Advisers Act of 1940 and the Investment Company Act of 1940.

Between 2015 and 2019, BlackRock Multi-Sector Income Trust (BIT) made significant investments through a lending facility in Aviron Group, LLC. This company developed print and advertising plans for one to two films per year. 

The commission stated that BlackRock inaccurately described Aviron as a “Diversified Financial Services.” It stated that Aviron paid a higher interest rate than was actually the case before identifying and amending the inaccuracies In 2019. 

“Retail and institutional investors rely on accurate disclosures of the companies that make up a closed-end or mutual fund’s portfolio to evaluate a current or prospective investment in the fund,” said Andrew Dean, Co-Chief of the Enforcement Division’s Asset Management Unit. “Investment advisers have a responsibility to provide this vital information, and BlackRock failed to do so with the Aviron investment.”

To resolve the charges brought against it, BlackRock agreed to pay a $2.5 million penalty in addition to accepting a cease-and-desist order, all without admitting or denying the SEC’s findings.

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