Tags: BlackRock | SEC | settlement | fund

BlackRock Agrees to Pay $12 Million Over SEC Conflicts Claim

Monday, 20 Apr 2015 05:00 PM

BlackRock Inc. agreed to pay $12 million to settle U.S. regulatory claims that it failed to disclose a conflict of interest of a top portfolio manager.

Daniel J. Rice III, a former money manager, invested client money in a BlackRock fund that had a stake in a company he founded, the Securities and Exchange Commission said in a statement Monday. BlackRock knew about and approved Rice’s investment and failed to disclose the conflict to investors, the regulator said. Rice left the company in 2012.

“BlackRock violated its fiduciary obligation to eliminate the conflict of interest created by Rice’s outside business activity,” Andrew Ceresney, director of the SEC’s enforcement division, said in a statement.

The company said in a statement that it has taken additional steps to enhance its policies and procedures regarding employees’ outside business activities.

“BlackRock has extensive policies and procedures in place to manage conflicts of interest,” the company said in a statement. “As a fiduciary for our clients, we take even the appearance of conflicts of interest extremely seriously.”

The SEC also sanctioned Bartholomew Battista, the company’s former compliance chief. Battista agreed to pay $60,000 to settle claims related to his role in the funds’ failure to report the information. In resolving the claims, BlackRock also agreed to hire a compliance consultant and conduct an internal review.

A phone call to Jonathan Polkes, an attorney for Battista at law firm Weil Gotshal & Manges, wasn’t immediately returned.

Rice, who helped manage five energy and natural resource mutual funds for the $4.77 trillion money manager, retired in 2012 to avoid the appearance of a conflict of interest. He is one of the founders of Rice Energy Inc., a natural gas company with a subsidiary that had a joint venture with one of his mutual fund’s top holdings at the time, Alpha Natural Resources Inc.

Rice founded the Canonsburg, Pennsylvania-based shale gas producer in 2007, when he was managing more than $1 billion for BlackRock funds and institutional clients.

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BlackRock Inc. agreed to pay $12 million to settle U.S. regulatory claims that it failed to disclose a conflict of interest of a top portfolio manager.
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2015-00-20
Monday, 20 Apr 2015 05:00 PM
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