BlackRock shares are experiencing a wild ride today, falling 9.2% in the morning amid rumors the company had as much as $10 billion in losses from CDO and subprime exposure. The shares rebounded slightly and were down 3.8% at closing. BlackRock released a statement denying the losses.
There is simply no truth to todays reported rumors, a statement on BlackRocks website said. As the company has previously disclosed in its SEC reports and earnings releases and calls, BlackRock has no material exposure or losses related to either subprime assets or CDO investments, whether held in the U.S. or in offshore vehicles.
In its fourth-quarter earnings release, the company disclosed $12 million of impairment charges related to CDO seed investments, which represented a substantial portion of the remaining balance sheet exposure to CDOs. In addition, BlackRock is not aware of any Department of Justice investigation relating to BlackRock.
In the morning, sources said rumors were circulating around trading desks that the Justice Department was investigating whether BlackRock tried to divert offshore some of its losses tied to CDOs with subprime exposure. Losses were rumored to range from $8 billion to $10 billion, according to one source.