Investment in Entertainment Industry
The United States Securities and Exchange Commission (SEC) has fined investment adviser BlackRock Advisors $2.5 million for failing to accurately describe investments in the entertainment industry that comprised a significant portion of a publicly traded fund it managed.
Failure to Disclose Correct Information
According to the SEC, between 2015 and 2019, BlackRock Multi-Sector Income Trust (BIT) made substantial investments in a print and advertising business called Aviron Group, which worked on one to two films annually through a loan facility. However, BlackRock incorrectly referred to Aviron as a company that provided "Diversified Financial Services" in several reports made available to investors. The SEC also alleged that BlackRock misrepresented Aviron's interest rate. These errors were discovered by BlackRock in 2019 and corrected in subsequent years.
Responsibility of Investment Advisers
Andrew Dean, co-chief of the enforcement division's asset management unit at the SEC, emphasized the responsibility of investment advisers to provide accurate information about the assets of the funds they manage. He stated that "BlackRock failed to do so with the Aviron investment."
$2.5 Million Penalty
BlackRock has agreed to pay a $2.5 million penalty for the incorrect investment disclosure agreement. It is worth noting that this investment is unrelated to BlackRock's involvement in the crypto ecosystem, where it has been in the spotlight for its proposed spot Bitcoin exchange-traded fund (ETF).
Spot Bitcoin ETF Approval Speculation
Interestingly, the SEC's charges against BlackRock for investment disclosure failure coincided with the notice of BlackRock's spot Bitcoin ETF being listed on the Depository Trust & Clearing Corporation (DTCC) platform. This development has prompted many to believe that the approval of a spot Bitcoin ETF is imminent.
DTCC Listing Confusion
However, there was confusion within the crypto community when the spot Bitcoin ETF was initially removed from the DTCC platform and then reappeared within hours. A DTCC spokesperson later clarified that the iShares Bitcoin ETF has been listed on the platform since August and that the move does not indicate any regulatory approval.
