The Securities and Exchange Commission (SEC) has taken action against investment advisory firm BlackRock Advisors, LLC BLK for allegedly failing to provide an accurate description of substantial investments in the entertainment sector related to a publicly traded fund under its guidance.
This revelation gains even more significance as the financial world prepares for Benzinga's Future of Digital Assets conference on Nov. 14, where transparency and accurate disclosures in the digital and traditional investment landscape will be a central theme.
According to the SEC's findings, from the period of 2015 to 2019, BlackRock Multi-Sector Income Trust (BIT) made significant financial commitments to Aviron Group, LLC.
Aviron is recognized for its work in developing advertising and print plans for one to two films annually.
However, the issue arose when BlackRock, in multiple annual and semi-annual reports presented to the public and filed with the SEC, mislabeled Aviron as a "Diversified Financial Services" entity, according to the SEC.
The SEC's order further stated that BlackRock reported a higher interest rate paid by Aviron than what was factual.
However, by 2019, BlackRock corrected these misrepresentations, ensuring accurate reporting of the Aviron investments in subsequent reports.
Andrew Dean, co-chief of the Enforcement Division’s Asset Management Unit at the SEC, emphasized the importance of accurate investment disclosures, stating, "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."
He further stressed the duty of investment advisors to provide this crucial information and pointed out BlackRock's oversight in the Aviron investment case.
In response to the charges, BlackRock has agreed to a settlement involving a penalty of $2.5 million.
While not admitting or denying the SEC's conclusions, BlackRock has consented to a cease-and-desist order, an official censure, and the aforementioned financial penalty.
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