The Securities and Exchange Commission (SEC) has fined investment adviser BlackRock Advisors $2.5 million for allegedly failing to depict investments in the entertainment industry accurately. These investments formed a significant portion of a publicly traded fund managed by BlackRock.

According to the SEC filing, between 2015 and 2019, BlackRock Multi-Sector Income Trust (BIT) invested extensively in a print and advertising business called Aviron Group, which engaged in one to two film projects annually through a loan facility.

Inaccurate Reporting

The SEC claimed that BlackRock mischaracterized Aviron as a provider of "Diversified Financial Services" in multiple annual and semi-annual reports made available to the public and investors.

Additionally, the SEC alleged that BlackRock misrepresented Aviron's interest rate, stating it was higher than it was. In 2019, BlackRock identified these errors and rectified the information relating to Aviron's investment in subsequent years.

Andrew Dean, co-chief of the enforcement division's asset management unit at the SEC, emphasized the responsibility of investment advisers to provide accurate essential information about the funds they manage. Dean stated, "BlackRock failed to do so with the Aviron investment."

Notable Developments

As part of settling the case, BlackRock has agreed to pay the $2.5 million penalty for the inaccurate investment disclosures; according to Cointelegraph, This investment in question has no connection to the crypto ecosystem.

Compliance Week noted that despite this, BlackRock has gained attention in the crypto spotlight due to its proposed spot Bitcoin exchange-traded fund (ETF).

Coinciding with the charges against BlackRock, news of the spot Bitcoin ETF being listed on the Depository Trust & Clearing Corporation (DTCC) prompted speculation about the approval of such an ETF. Senior Bloomberg ETF Analyst Eric Balchunas regarded the DTCC listing as part of the process of bringing a crypto ETF to market.

However, confusion ensued when the spot Bitcoin ETF was briefly removed from the platform and reappeared within hours. Clarifying the situation, a spokesperson from DTCC confirmed that the iShares Bitcoin ETF had been listed on the platform since August and denied any indication of regulatory approval.

Photo: Sasun Bughdaryan/Unsplash