The U.S. Securities and Exchange Commission (SEC) has imposed a $2.5 million fine on BlackRock Advisors for misrepresenting investments in its publicly traded BlackRock Multi-Sector Income Trust.
According to the SEC, between 2015 and 2019, the world’s largest asset manager invested a significant portion of the trust’s portfolio in the entertainment company Aviron Group through a loan facility. However, BlackRock incorrectly classified Aviron under “Diversified Financial Services” and overstated its interest rates in shareholder reports.
The SEC claimed these misrepresentations deprived investors of critical information on the fund’s entertainment industry exposure. Andrew Dean of the SEC Enforcement Division emphasized the importance of investment advisors providing accurate data on the assets they manage. He noted that “BlackRock failed to do so with the Aviron investment.”
BlackRock discovered the errors in 2019 and corrected them in subsequent reports. However, the firm has agreed to pay the $2.5 million penalty required by the SEC settlement.
Meanwhile, on the same day as the SEC fine announcement, a long-awaited BlackRock spot bitcoin ETF was briefly listed on the Depository Trust & Clearing Corporation (DTCC) platform. This led to speculation that regulatory approval for the Bitcoin ETF might be imminent.
However, the DTCC listing temporarily disappeared and then reappeared within hours after its first appearance. A DTCC spokesperson later clarified that the BlackRock Bitcoin ETF had been listed since August and that the fluctuating status didn’t reflect any SEC decision.
Senior Bloomberg analyst Eric Balchunas characterized this sequence as “all part of the process” for introducing a cryptocurrency product to the market. Nevertheless, the sporadic listing changes underscored the uncertainty surrounding the roadmap for Bitcoin ETFs.
In another development earlier in October, Grayscale’s GBTC traded at a 15.87% discount, marking a 22-month low. This occurred amid optimism that the U.S. SEC might approve the conversion of the investment vehicle into a Bitcoin ETF. The market reaction came after the SEC’s decision not to appeal a federal court ruling rejecting Grayscale’s spot ETF application.
Grayscale had earlier urged the SEC to expedite its decision on Bitcoin ETFs following its legal victory. The exchange argued that the SEC no longer had a legal basis to differentiate between Bitcoin futures exchange-traded products (ETPs) and spot Bitcoin ETPs.
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