SEC Charges BlackRock with Failing to Disclose Investments

MANHATTAN, NEW YORK, UNITED STATES – 2021/05/25: BlackRock offices in New York City. Founded in 1988, BlackRock, Inc. is an US multinational investment management corporation. The corporation is the world’s largest asset manager, with $8.67 trillion in assets under management as of January 2021. (Photo by Erik McGregor/LightRocket via Getty Images)

The SEC today charged BlackRock Advisors, LLC for failing to properly disclose investments that comprise a significant portion of a publicly traded fund it advises. This is according to an SEC statement released today. In particular, the investments are within the entertainment industry.

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To settle the charges, BlackRock is agreeing to pay a $2.5 million penalty. The SEC’s order finds that, from 2015 to 2019, BlackRock Multi-Sector Income Trust (BIT) made significant investments, through a lending facility, in Aviron Group, LLC. Aviron is a company that developed print and advertising plans for one to two films per year.

The order adds that “in many of BIT’s annual and semi-annual reports that were publicly available to investors and filed with the SEC, BlackRock inaccurately described Aviron as a “Diversified Financial Services” company.” In response to the order, BlackRock agreed to a cease-and-desist order and a censure in addition to the monetary penalty. However, the company did not admit or deny the SEC’s findings.

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“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.”

BlackRock and its representatives have yet to comment publicly on the latest SEC findings.