The Securities & Exchange Commission today charged BlackRock Advisors, LLC, an investment adviser, for failing to accurately describe investments in the entertainment industry that comprised a significant portion of a publicly traded fund it advised. To settle the charges, BlackRock agreed to pay a $2.5 million penalty.
The SEC’s order finds that, from 2015 to 2019, BlackRock Multi-Sector Income Trust (BIT) made significant investments, through a lending facility, in Aviron Group, LLC, a company that developed print & advertising plans for one to two films per year. According to the SEC’s order, in many of BIT’s annual & semi-annual reports that were publicly available to investors & filed with the SEC, BlackRock inaccurately described Aviron as a “Diversified Financial Services” company. The SEC’s order also finds that BlackRock stated that Aviron paid a higher interest rate than was actually the case. In 2019, BlackRock identified these inaccuracies & BIT accurately reported the Aviron investment in reports going forward.
“Retail & 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,” said Andrew Dean, Co-Chief of the Enforcement Division’s Asset Management Unit. “Investment advisers have a responsibility to provide this vital information, & BlackRock failed to do so with the Aviron investment.”
BlackRock consented to the entry of the SEC’s order finding that it violated the Investment Advisers Act of 1940 & the Investment Company Act of 1940. Without admitting or denying the SEC’s findings, BlackRock agreed to a cease-&-desist order & a censure in addition to the monetary penalty.
Previously, the SEC charged & then resolved its action against William Sadleir, the founder of Aviron, for misappropriating BIT funds invested in Aviron.
The SEC’s investigation was conducted by Salvatore Massa & Brian Fitzpatrick under the supervision of Mr. Dean & Corey Schuster, all with the Enforcement Division’s Asset Management Unit.