SEC May Penalize BlackRock For Selling Unregistered Shares

The U.S. Securities and Exchange Commission (SEC) is looking into penalizing BlackRock Inc.’s iShares Gold Trust after the Trust allegedly sold $296 million in shares of an exchange-traded fund between February 19th and March 3rd of this year. Because of the problem, the company may be required to repurchase the excess shares at the original price plus interest. The iShares Gold Trust registered with the Securities and Exchange Commission (SEC) for 300 million shares, after it said it sold between late February and early March nearly 25 million more shares than it had previously registered for. Blackrock stated that it may have to sell gold in the fund in order to meet its obligations by buying back the shares that were inadvertently not registered and paying interest to investors who purchased the shares. Those investors may have the right to collect damages from the fund. It may be required to re-acquire nearly 25 million shares of the fund it issued between February 19th and March 3rd. This gold fund is not a typical exchange-traded fund (ETF) in that it is registered as an exchange-traded commodity, and it is unprecedented for the sale of unregistered shares of an exchange-traded product.

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