SAE rewarded participating analysts with higher ratings in financial industry magazine rankings important for name recognition and career advancement, and as a symbol of achievement, all of which could “lead to monetary gain both for those analysts and their respective brokerage firms,” according to the agreement. The filing doesn’t name any of the analysts or brokerages.
In September, the Treasury Department’s Office of Financial Research said money managers could endanger the financial system when reaching for higher returns, herding into popular asset classes or amplifying price movements with leverage. The Financial Stability Oversight Council, authorized under the Dodd-Frank financial regulatory law to identify companies that could pose a threat to stability, discussed and agreed to review BlackRock and Fidelity Investments, two people with knowledge of the matter said in November. BlackRock has said the study didn’t link the size of a money manager to risks posed by certain products and practices.
Schneiderman said at the Bloomberg Markets 50 Summit in New York in September that his office was looking into combating the advantages won by securing early access to market-moving data. Calling the issue “Insider Trading 2.0,” Schneiderman said the combination of high-speed trading and early data access unfairly sets up a small group of investors to reap enormous profits.
Last year, financial information provider Thomson Reuters Corp. reached a deal with Schneiderman’s office in which it agreed to stop providing consumer survey data from the University of Michigan to certain high-frequency traders two seconds before other investors. Thomson Reuters competes with Bloomberg LP, the parent of Bloomberg News.
BlackRock, co-founded by Fink in 1988, was largely a fixed- income manager until the mid-2000s. The firm diversified beyond bonds through acquisitions including that of State Street Research & Management Co. and Merrill Lynch & Co.’s investment unit to add stocks and other assets. Its purchase of Barclays Plc’s investment division made it into the world’s largest asset manager.