The United States Securities and Exchange Commission (SEC) has imposed a hefty $2.5 million fine on investment adviser BlackRock Advisors. The fine comes after accusations that BlackRock failed to accurately describe investments in the entertainment industry within a publicly traded fund it managed. According to the SEC, between 2015 and 2019, the BlackRock Multi-Sector Income Trust (BIT) made significant investments in a print and advertising business named Aviron Group. Aviron worked on one to two films annually through a loan facility.
The SEC alleged that the firm incorrectly labeled Aviron as a company providing “Diversified Financial Services” in several of BIT’s publicly available annual and semi-annual reports. Additionally, BlackRock misrepresented Aviron’s interest rate, claiming it was higher than it actually was.
These errors were discovered in 2019, leading to corrections in the subsequent years. Andrew Dean, co-chief of the SEC’s enforcement division’s asset management unit, emphasized BlackRock’s responsibility to provide accurate information about fund assets, stating that “BlackRock failed to do so with the Aviron investment.”
BlackRock Agrees to Pay Penalty Amid Crypto Spotlight
Despite the unrelated nature of this investment case to the crypto ecosystem, the gompany has been under the spotlight due to its proposed spot Bitcoin exchange-traded fund (ETF). While the SEC’s charges against the firm coincided with the listing of its spot Bitcoin ETF on the Depository Trust & Clearing Corporation (DTCC), the listing created confusion within the crypto community.
Senior Bloomberg ETF analyst Eric Balchunas referred to the DTCC listing as a regular step in the process of bringing a crypto ETF to market. However, the spot Bitcoin ETF was briefly removed from the platform, causing uncertainty. A DTCC spokesperson later clarified that the iShares Bitcoin ETF had been listed on the platform since August, emphasizing that the move does not indicate any regulatory approval.