BlackRock agreed to discontinue using an analyst survey program after New York Attorney General Eric Schneiderman concluded non-public information could have been used to execute trades, confirmed BlackRock spokesman Brian Beades.
The program was developed by the scientific active equities investment group within Barclays Global Investors, which BlackRock acquired in 2009.
The attorney general's office conducted an investigation of the survey program and found that the design of the survey program “allowed it to capture more than previously published analyst views, including non-public analyst sentiment that could be used to trade ahead of the market reaction to upcoming analyst reports,” according to an agreement reached Wednesday between BlackRock and Mr. Schneiderman's office.
“This survey was initiated by Barclays Global Investors prior to its acquisition by BlackRock. We have discontinued its use to avoid even the appearance of any impropriety,” Mr. Beades said in an e-mailed statement.
The statement adds that the wording cited by the attorney general is “totally inconsistent with the standards by which BlackRock does business.”
BlackRock paid the state $400,000 to cover the cost of the investigation but did not pay a fine or penalty and admitted no wrongdoing.
Bloomberg contributed to this story.