BlackRock Sued by Funds 'Grossly Excessive' Securities Lending Fees

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BlackRock, the world’s biggest money manager, is accused in a lawsuit by two pension funds of reaping 'grossly excessive' compensation from securities- lending returns associated with iShares Inc.

'Defendants have systematically violated their fiduciary duties, setting up an excessive fee structure designed to loot securities lending returns properly due to iShares investors', the funds, which invest in iShares, said in a complaint in federal court in Nashville, Tennessee.

Investment funds with holdings in stocks or other securities can earn more by lending out their holdings to borrowers, including short sellers, those betting the value of a security will fall. Investors who lend out the securities divide the proceeds with a securities lending agent. Some funds, including BlackRock, use their own securities-lending operation.

Bloomberg reports that the pension funds allege that BlackRock affiliates collected 40% of revenue earned from securities lending transactions as compensation.

Blackrock said the suit is without merit and will contest it.

Hit the link below to access the complete Bloomberg article:

BlackRock Sued by Funds Over Securities Lending Fees

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