SEC Charges Blackrock Over Investment Fund Disclosures

By
Kevin George
Kevin George
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Kevin George is a freelance crypto writer and editor for Investopedia. He holds a master's degree in finance and has extensive knowledge and experience in the area of trading, markets, and economics.
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Updated October 25, 2023
BlackRock offices in New York City

Erik McGregor / LightRocket / Getty

Key Takeaways

  • BlackRock agreed to a $2.5 million fine for failing to properly disclose a fund's investments.
  • The company's Multi-Sector Income Trust (BIT) inaccurately referred to Aviron Group as a 'diversified financial services company'.
  • Aviron's owner was charged with defrauding $13.8M from the now-defunct firm.

BlackRock, Inc. (BLK), has been charged by the Securities and Exchange Commission (SEC) for failing to properly disclose investments at a firm it was advising.

The world’s largest investment firm by assets under management (AUM) agreed to pay a $2.5 million fine for its failure to properly disclose investments in the entertainment industry. The SEC's complaint said from 2015 to 2019, BlackRock Multi-Sector Income Trust (BIT) made investments, via a lending facility, in Aviron Group, LLC.

Aviron developed print and advertising plans for films, but the SEC found BIT’s annual and semi-annual reports "inaccurately described Aviron as a 'Diversified Financial Services' company." The regulator also found BlackRock's statements noted Aviron paying a higher interest rate than it actually was.

Andrew Dean, Co-Chief of the SEC's Enforcement Division’s Asset Management Unit, said both retail and institutional investors need "accurate disclosures" of fund portfolios, and "BlackRock failed to do so with the Aviron investment.”

In a separate litigation last year, the SEC charged William Sadleir, founder of the now defunct Aviron group, of "defrauding" $13.8 million from the publicly traded firm. BlackRock had invested approximately $75 million in the fund, according to the press statement.

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Article Sources
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  1. SEC. "SEC Charges BlackRock with Failing to Properly Disclose Investments."

  2. SEC. "Judgement Against William Sadleir."

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