BlackRock fined $2.5M by SEC for incorrect investment disclosure
The United States Securities and Exchange Commission has fined investment adviser BlackRock Advisors $2.5 million, accusing it of failing to accurately describe investments in the entertainment industry that comprised a significant portion of a publicly traded fund it managed.
According to the SEC’s filing, between 2015 and 2019, BlackRock Multi-Sector Income Trust (BIT) made sizeable investments in a print and advertising business called Aviron Group that worked on one to two films annually through a loan facility.
The SEC alleged that BlackRock incorrectly referred to Aviron as a company that provided “Diversified Financial Services” in a number of BIT’s annual and semi-annual reports that were made available to investors publicly. The SEC also alleged that BlackRock misrepresented Aviron’s interest rate by claiming that it was higher than it actually was. However, the asset manager discovered these errors in 2019 and corrected information about Aviron’s investment in the following years.
Andrew Dean, co-chief of the enforcement division’s asset management unit at the SEC, said that the investment advisers have a responsibility to provide accurate vital information about the assets of the funds it manages, and “BlackRock failed to do so with the Aviron investment.”
BlackRock agreed to pay the $2.5-million penalty for the incorrect investment disclosure agreement. Although the investment was unrelated to the crypto ecosystem, the world’s largest asset manager has been in the crypto spotlight for its proposed spot Bitcoin (BTC) exchange-traded fund (ETF).
Related: Bitcoin ETF to trigger massive demand from institutions, EY says
The SEC’s charges against BlackRock for investment discourse failure came on the same day as its spot Bitcoin exchange-traded fund (ETF) was noticed listed on the Depository Trust & Clearing Corporation (DTCC) listing prompting many to believe the spot Bitcoin approval is near.
Senior Bloomberg ETF analyst Eric Balchunas called the DTCC listing “all part of the process” of bringing a crypto ETF to market. However, within hours of the DTCC listing, the spot Bitcoin ETF was removed from the platform and reappeared within hours, creating confusion among the crypto community. However, a DTCC spokesperson later confirmed that the iShares Bitcoin ETF has been listed on the platform since August and said the move is not indicative of any regulatory approval.
Magazine: Blockchain detectives — Mt. Gox collapse saw birth of Chainalysis
According to the US Department of Justice, Wolf Capital’s co-founder has pleaded guilty to wire fraud conspiracy for luring 2,800 crypto investors into a Ponzi scheme.
Making Britain better off will be “at the forefront of the chancellor’s mind” during her visit to China, the Treasury has said amid controversy over the trip.
Rachel Reeves flew out on Friday after ignoring calls from opposition parties to cancel the long-planned venture because of market turmoil at home.
The past week has seen a drop in the pound and an increase in government borrowing costs, which has fuelled speculation of more spending cuts or tax rises.
The Tories have accused the chancellor of having “fled to China” rather than explain how she will fix the UK’s flatlining economy, while the Liberal Democrats say she should stay in Britain and announce a “plan B” to address market volatility.
However, Ms Reeves has rejected calls to cancel the visit, writing in The Times on Friday night that choosing not to engage with China is “no choice at all”.
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The chancellor will be accompanied by Bank of England governor Andrew Bailey and other senior executives.
She will meet with her counterpart, Vice Premier He Lifeng, in Beijing on Saturday to discuss financial services, trade and investment.
She will also “raise difficult issues”, including Chinese firms supporting Russia’s invasion of Ukraine and concerns over constraints on rights and freedoms in Hong Kong, the Treasury said.
But it did not mention whether Ms Reeves would raise the treatment of the Uyghur community, which Downing Street said Foreign Secretary David Lammy would do during his visit last year.
Britain’s Foreign Secretary David Lammy and Chinese Foreign Minister Wang Yi in Beijing. Pic: AP
On Friday, Culture Secretary Lisa Nandy defended the trip, telling Sky News that the climbing cost of government borrowing was a “global trend” that had affected many countries, “most notably the United States”.
“We are still on track to be the fastest growing economy, according to the OECD [Organisation for Economic Co-operation and Development] in Europe,” she told Anna Jones on Sky News Breakfast.
“China is the second-largest economy, and what China does has the biggest impact on people from Stockton to Sunderland, right across the UK, and it’s absolutely essential that we have a relationship with them.”
Read more – Ed Conway analysis: The chancellor’s gamble with China
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Nandy defends Reeves’ trip to China
However, former prime minister Boris Johnson said Ms Reeves had “been rumbled” and said she should “make her way to HR and collect her P45 – or stay in China”.
While in the country’s capital, Ms Reeves will also visit British bike brand Brompton’s flagship store, which relies heavily on exports to China, before heading to Shanghai for talks with representatives across British and Chinese businesses.
It is the first UK-China Economic and Financial Dialogue (EFD) since 2019, building on the Labour government’s plan for a “pragmatic” policy with the world’s second-largest economy.
Sir Keir Starmer was the first British prime minister to meet with China’s President Xi Jinping in six years at the G20 summit in Brazil last autumn.
Relations between the UK and China have become strained over the last decade as the Conservative government spoke out against human rights abuses and concerns grew over national security risks.
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How much do we trade with China?
Navigating this has proved tricky given China is the UK’s fourth largest single trading partner, with a trade relationship worth almost £113bn and exports to China supporting over 455,000 jobs in the UK in 2020, according to the government.
During the Tories’ 14 years in office, the approach varied dramatically from the “golden era” under David Cameron to hawkish aggression under Liz Truss, while Rishi Sunak vowed to be “robust” but resisted pressure from his own party to brand China a threat.
The Treasury said a stable relationship with China would support economic growth and that “making working people across Britain secure and better off is at the forefront of the chancellor’s mind”.
Ahead of her visit, Ms Reeves said: “By finding common ground on trade and investment, while being candid about our differences and upholding national security as the first duty of this government, we can build a long-term economic relationship with China that works in the national interest.”
The Bitcoin Act’s passage could eventually send BTC’s price past $1 million per coin, industry executives say.
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