United States SEC Fines Asset Manager BlackRock $2.5 Million for Wrongly Describing Invested Company Aviron in Entertainment, Print & Advertising as Diversified Financial Services Company & Overstating Aviron Interest Rate Payout, BlackRock Portfolio Manager Fined $250,000 for Failure to Disclose Conflict of Interest, Invested $75 Million via BlackRock Multi-Sector Income Trust & Asked Aviron to Advance Daughter Acting Career & Securing a Role in a Film in 2018
26th October 2023 | Hong Kong
The United States Securities & Exchange Commission (SEC) has fined asset manager BlackRock $2.5 million for wrongly describing invested company Aviron in “Entertainment, Print & Advertising” as “Diversified Financial Services” company and overstating Aviron interest rate payout (BlackRock Multi-Sector Income Trust 2015 to 2019). Earlier in 2023 January, the United States SEC charged and fined former BlackRock Portfolio Manager Randy Robertson $250,000 for failing to disclose conflict of interest in film distribution company Aviron, investing $75 million (2015 to 2019) as a co-portfolio manager of BlackRock Multi-Sector Income Trust and asked Aviron to advance daughter’s acting career & securing a role in a film in 2018. More info below:
“ United States SEC Fines Asset Manager BlackRock $2.5 Million for Wrongly Describing Invested Company Aviron in Entertainment, Print & Advertising as Diversified Financial Services Company & Overstating Aviron Interest Rate Payout, BlackRock Portfolio Manager Fined $250,000 for Failure to Disclose Conflict of Interest, Invested $75 Million via BlackRock Multi-Sector Income Trust & Asked Aviron to Advance Daughter Acting Career & Securing a Role in a Film in 2018 “
Andrew Dean, Co-Chief of the Enforcement Division’s Asset Management Unit: “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.”
United States SEC Fines Asset Manager BlackRock $2.5 Million for Wrongly Describing Invested Company Aviron in Entertainment, Print & Advertising as Diversified Financial Services Company & Overstating Aviron Interest Rate Payout
24th October 2023 – The Securities and 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 and advertising plans for one to two films per year. According to the SEC’s order, in many of BIT’s annual and semi-annual reports that were publicly available to investors and 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 and BIT accurately reported the Aviron investment in reports going forward.
BlackRock consented to the entry of the SEC’s order finding that it violated the Investment Advisers Act of 1940 and the Investment Company Act of 1940. Without admitting or denying the SEC’s findings, BlackRock agreed to a cease-and-desist order and a censure in addition to the monetary penalty.
Previously, the SEC charged and 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 and Brian Fitzpatrick under the supervision of Mr. Dean and Corey Schuster, all with the Enforcement Division’s Asset Management Unit.
United States SEC Fines BlackRock Portfolio Manager $250,000 for Failure to Disclose Conflict of Interest in Film Distribution Company Aviron, Invested $75 Million via BlackRock Multi-Sector Income Trust & Asked Aviron to Advance Daughter Acting Career & Securing a Role in a Film in 2018
7th January 2023 – The United States Securities and Exchange Commission (SEC) has charged and fined former BlackRock Portfolio Manager Randy Robertson $250,000 for failing to disclose conflict of interest in film distribution company Aviron, investing $75 million (2015 to 2019) as a co-portfolio manager of BlackRock Multi-Sector Income Trust and asked Aviron to advance daughter’s acting career & securing a role in a film in 2018. United States SEC: “Robertson did not disclose to BIT’s board of trustees or BlackRock’s compliance and legal teams that he asked Aviron to help advance his daughter’s acting career or that Aviron helped his daughter obtain a film role.” Andrew Dean, Co-Chief of the Enforcement Division’s Asset Management Unit: “Investment professionals must be forthcoming about any conflicts of interest they may have with the companies in which they invest client funds, including situations involving favors or assistance to family members. Investors must be able to know that the advice they receive is free of undisclosed conflicts, regardless of whether the conflict is financial in nature.” BlackRock Multi-Sector Income Trust’s (BIT) currently managed around $870 million with net asset value of $564 million (6/1/23). In 2021, the fund returned 4.78%. See below for United States SEC statement:
The BlackRock Multi-Sector Income Trust, BIT, is a taxable closed-end Trust. BIT commenced operations in February 2013 with the investment objective to seek high current income, with a secondary objective of capital appreciation. In investing the Trusts assets, the Advisors expect to allocate capital across multiple sectors of the fixed income securities market by evaluating portfolio risk in light of the available investment opportunities and prevailing risks in the fixed income market, with the goal of delivering attractive risk-adjusted returns.
BlackRock Multi-Sector Income Trust’s (BIT) (the ‘Trust’) primary investment objective is to seek high current income, with a secondary objective of capital appreciation. The Trust seeks to achieve its investment objectives by investing, under normal market conditions, at least 80% of its assets in loan and debt instruments and other investments with similar economic characteristics. The Trust may invest directly in such securities or synthetically through the use of derivatives.
United States SEC Statement
SEC Charges Former BlackRock Portfolio Manager with Undisclosed Conflict of Interest
5th Jan 2023 – The Securities and Exchange Commission today charged Randy Robertson, a former BlackRock Advisors, LLC portfolio manager, for failing to disclose a conflict of interest arising from his relationship with a film distribution company in which the fund he managed for BlackRock invested millions of dollars. To settle the charges, Robertson agreed to pay a $250,000 penalty.
The SEC’s order finds that, from 2015 to 2019, BlackRock Multi-Sector Income Trust (BIT), a closed end publicly traded fund, invested in Aviron Group, LLC subsidiaries by loaning the subsidiaries, which were in the business of funding advertising budgets of motion pictures, as much as $75 million. Robertson, a co-portfolio manager of BIT, had a significant role recommending and overseeing BIT’s loans to the Aviron subsidiaries. At the same time, Robertson asked Aviron to help advance his daughter’s acting career. Aviron helped Robertson’s daughter obtain a small role in a film produced in 2018. Robertson did not disclose to BIT’s board of trustees or BlackRock’s compliance and legal teams that he asked Aviron to help advance his daughter’s acting career or that Aviron helped his daughter obtain a film role.
“Investment professionals must be forthcoming about any conflicts of interest they may have with the companies in which they invest client funds, including situations involving favors or assistance to family members,” said Andrew Dean, Co-Chief of the Enforcement Division’s Asset Management Unit. “Investors must be able to know that the advice they receive is free of undisclosed conflicts, regardless of whether the conflict is financial in nature.”
Robertson consented to the entry of the SEC’s order finding that he violated Section 206(2) of the Investment Advisers Act of 1940. Without admitting or denying the SEC’s findings, Robertson agreed to a cease-and-desist order, a censure, and the $250,000 penalty referenced above.
The SEC’s investigation was conducted by Salvatore Massa and Brian Fitzpatrick under the supervision of Mr. Dean with the Enforcement Division’s Asset Management Unit in the New York Regional Office.
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