Indiana Secretary of State reports cease & desist order against BlackRock for alleged securities fraud

Thursday, August 22, 2024 at 1:58 PM

By Staff report

The Securities Division is seeking to stop BlackRock’s alleged fraudulent actions related to its ESG funds and allocation focus.

Indiana Secretary of State Diego Morales by and through the Indiana Securities Division has issued a Summary Cease and Desist Order against BlackRock, Inc. et al, a multinational investment company and the world’s largest asset manager.

The Securities Division is seeking to stop BlackRock’s alleged fraudulent actions related to its ESG funds and allocation focus. BlackRock provides exchange-traded funds (ETFs), or pooled investments categorized as securities, and currently manages over $10.6 trillion in investments through 70 offices in 30 countries. BlackRock has asserted itself as a leader in the investment industry to promote environmental, social, and governance (ESG) factors on portfolio companies.

The Securities Division alleges BlackRock, through its assertions relating to ESG products and offerings, has repeatedly made false and misleading statements to Hoosier investors. These misrepresentations pertain to BlackRock’s involvement in pushing ESG factors on portfolio companies. BlackRock also allegedly informed clients they would see better long-term financial prospects and financial outcomes through ESG-backed funds, with little to no evidence to substantiate the claim.

For its funds marketed as non-ESG, BlackRock claims these funds do not follow an ESG investment strategy. However, BlackRock has issued several statements and actions in commitment of using all assets under its management to incorporate ESG considerations, including advancing the environmental goals of net zero carbon emissions.

“Investment companies that engage in fraudulent activities not only betray the trust of their clients but undermine the integrity of our financial markets. My office is committed to rigorously enforcing the law and strengthening our regulatory frameworks to ensure Hoosier investors are protected and that those who exploit the system are held accountable,” said Diego Morales, Indiana Secretary of State.

If you have questions or concerns about your investments or financial professional, please contact the Indiana Securities Division, 317-232-6681.