The Securities and Exchange Commission (SEC) has charged BlackRock for potentially misrepresenting investments. The regulatory authority has imposed a $2.5 million fine on the asset managing firm.
Quick Take:
- The SEC has charged BlackRock for false investment reporting in partnership with the Aviron Group.
- The largest asset management firm of the group has agreed to pay a $2.5 million penalty fee to settle the charges.
- BlackRoack’s spot Bitcoin ETF, iBTC is back on the DTCC website after removal on Tuesday morning.
In a recent development, the Bitcoin ETF plans have seen an unexpected turn of events. The SEC has alleged that BlackRock indulged in a misrepresentation of entertainment industry investments. As per the authority, these assets comprise a publicly traded fund.
As per details, BlackRock has over $9.43 trillion worth of assets under management, making it the largest asset managing company in the world. However, the allegations suggest that the firm falsely reported high interest rates from its investment in a film production company called Aviron Group.
BlackRock partnered with the Aviron Group from 2015 to 2019. It funded one to two films annually. However, the SEC’s claims that the interest rates reported from this partnership were quite inaccurate. Upon finding this out in 2019, BlackRock fixed its financial disclosures and reports to move forward.
The SEC Moves Against BlackRock
The Co-Chief of the SEC Enforcement Division’s Asset Management Unit, Andrew Dean urged the importance of accurate disclosures. He added,
“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. Investment advisers have a responsibility to provide this vital information, and BlackRock failed to do so with the Aviron investment.”
The SEC believes that companies have a responsibility to provide true statistics, as most investors rely on these numbers to make decisions. Therefore, BlackRock’s negligence misled investors and put them at risk.
In response to the allegations, BlackRock agreed to a cease-and-desist order. However, the firm did not agree to the charges leveled against itself in the settlement. As a penalty, BlackRock agreed to pay the $2.5 million fine imposed by the SEC.
A Hit to Bitcoin ETF Plans?
Along with this fine, BlackRock faced another setback on Tuesday. The spot Bitcoin ETF of the company, iShares Bitcoin Trust was delisted from the Depository Trust & Clearing Corporation (DTCC) website. This was an unexpected development, causing confusion in the market.
The ETF was added to the list on Monday, suggesting that the DTCC is giving a go-ahead for the approval of spot Bitcoin ETF. DTCC is responsible for providing clearing and settlement services for financial markets. Thus, it was a major positive sign for the crypto market.
The listing triggered a significant bull run in the crypto market. It led to a 20% surge in the market, as the industry saw inflows of more than $200 billion. The crypto market did lose some confidence amid this development. However, iBTC was back on the DTCC website towards the end of the day, suggesting that its removal was just a glitch.
