(Adds background about the portfolio manager, details on SEC
probe, comment from company)
By Sarah N. Lynch
WASHINGTON, June 27 BlackRock Inc, one
of the world's largest asset managers, disclosed on Friday that
it may face civil charges by a U.S. securities regulator over
disclosures tied to a former portfolio manager whose personal
investments suggested a possible conflict of interest.
In a regulatory filing, BlackRock said its BlackRock
Advisors LLC unit received a "Wells Notice" from the U.S.
Securities and Exchange Commission.
A Wells notice is usually the last step in an SEC
investigation before a civil enforcement action is filed, and
gives a recipient one last chance to convince regulators not to
file a lawsuit.
BlackRock said it intends to cooperate with the SEC, and
explain why no enforcement action is necessary.
The investigation is tied to the personal investments of
Daniel Rice, who left BlackRock in June 2012 over concerns about
a potential conflict involving his family business and holdings
in the firm's energy mutual funds.
The potential conflict stemmed from a joint venture with
Alpha Natural Resources and a subsidiary of a natural gas
drilling company founded by Rice.
In Friday's filing, BlackRock said it had found no evidence
of improper trading in Rice's portfolios and that no clients had
It said the June 17 Wells notice suggests the SEC has
concerns with BlackRock's disclosures related to Rice, and with
the company's policies and procedures.
BlackRock said any civil enforcement action would likely
allege possible violations of anti-fraud laws and rules
governing compliance programs.
"BlackRock put in place a number of additional specific
measures in order to manage any potential conflicts of interest
given Mr. Rice's situation," spokesman Brian Beades said.
"BlackRock has further enhanced its compliance policies and
procedures as our business and industry evolve and in keeping
with best practice."
(Reporting by Sarah N. Lynch in Washington; Additional
reporting by Ashley Lau in New York; Editing by Sandra Maler)