BlackRock was fined £9.5 million ($15.3 million) by the U.K.'s Financial Services Authority for failing to hold trust letters for money market deposits for 3½ years, an FSA spokesman confirmed.
The FSA requires a cash manager to secure trust letters from banks holding its client money so that, in the event of an insolvency, client cash can be quickly identified and returned.
However, the regulator found that one of BlackRock's units, BlackRock Investment Management (UK), formerly Merrill Lynch Investment Managers, failed to do obtain these letters for some £1.36 billion in money market deposits placed in third-party banks for 3½ years through March 31, 2010.
The error occurred because of systems changes following BlackRock's acquisition of MLIM in 2006.
In an e-mailed statement, a BlackRock spokeswoman, who asked not to be named, noted that clients did not sustain any losses as a result of the error. “Still, we regret this instance where our U.K. procedures regarding money market deposits for a number of our clients were not consistent with applicable standards, and we are pleased to have fully resolved this matter with the FSA and that the matter is now closed.”