BlackRock, one of the world’s largest asset managers, was sued on Monday by investors who said it stuck them with higher management fees and tax bills by using improper accounting that inflated the values of more than 70 equity mutual funds.
Allegations of Misconduct
According to a complaint filed in a New York state court in Manhattan, BlackRock misclassified dividend income and realized capital gains as fund assets, despite having to distribute these sums to investors within the tax year. Investors said the inflated NAVs caused them to buy fewer shares than they were entitled to, and pay management fees and higher taxes on what were essentially fund liabilities.
BlackRock did not immediately respond to requests for comment. The New York-based company ended March with $13.89 trillion of assets under management, including $7.66 trillion in equities. BlackRock has said more than half of the assets it manages are in retirement accounts, whose tax consequences differ from those of non-retirement accounts.
The lawsuit seeks unspecified damages for investors in BlackRock actively managed and indexed equity mutual funds over the last three years. Lawyers for the investors did not immediately respond to requests for additional comment.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
