The Securities and Exchange Commission (SEC) of the United States has once again caught attention with a recent decision. According to the decision, the SEC officials noticed that the investments in the entertainment sector, which constitute a significant portion of a publicly traded fund managed by investment advisor BlackRock Advisors, were not accurately described. As a result, the company was fined $2.5 million.
According to the SEC filing, BlackRock Multi-Sector Income Trust (BIT) made substantial investments in a press and advertising company named Aviron Group between 2015 and 2019. Additionally, the company worked on one to two films per year through a credit facility.
SEC officials revealed that BlackRock mistakenly referred to Aviron as a provider of Diversified Financial Services in the annual and semi-annual reports publicly presented to BIT investors. The SEC also claimed that BlackRock falsely stated that Aviron’s interest rate was higher than it actually was, emphasizing that this was a misrepresentation. However, the asset manager acknowledged these errors in 2019 and corrected the details regarding Aviron’s investments in subsequent years.
Andrew Dean, co-head of the asset management unit of the SEC’s enforcement division, stated that investment advisors have a responsibility to provide accurate vital information about the assets managed by funds, and BlackRock failed to do so in the case of Aviron’s investment.
Following this decision, BlackRock agreed to pay the $2.5 million fine for the incorrect investment disclosure contract. Despite having no connection to the cryptocurrency market, the world’s largest asset manager gained attention in the crypto market due to its application for a spot Bitcoin exchange-traded fund (ETF).
The allegations against BlackRock regarding the investment disclosure error coincided with the discovery that the spot Bitcoin ETF was listed on the Depository Trust & Clearing Corporation (DTCC) list on the same day, convincing many people that the approval of the spot Bitcoin ETF was imminent.
Senior ETF analyst Eric Balchunas associated the DTCC listing with the process of launching a crypto ETF. The issue with the DTCC listing caused confusion among the crypto community. Subsequently, a DTCC spokesperson confirmed that the iShares Bitcoin ETF has been listed on the platform since August.