BlackRock Fund Advisors has agreed to pay a $1.5 million fine for operating an ETF without obtaining the required exemptive relief from the Securities and Exchange Commission.
According to the agency, the RIA, a subsidiary of BlackRock, operated the iShares MSCI Russia Capped ETF (the Russia Fund Company) from December 2010 through January 2015, relying on an exemptive that covered iShares Inc. and iShares Trust (iShares Future Funds Relief).
Exemptive relief from the Investment Company Act is required for ETFs to operative in order not to violate various pricing provisions of the law.
In early 2011 BlackRock realized the iShares Futures Funds Relief did not extend to the Russia Fund ETF. It subsequently received a comment letter from SEC staff about a registration it had filed for another standalone ETF that would invest in Russia securities.