FSA fines Blackrock Investment Management £9.5m
The Financial Services Authority (FSA) has fined Blackrock Investment Management (BIM) £9.5m for failing to protect client money adequately.
The regulator said BIM had not put in place trust letters for certain money market deposits.
It also said the firm had failed to take "reasonable care to organise and control its affairs responsibly" in relation to client money.
Blackrock said it regretted where its UK procedures did not meet standards.
According to FSA rules: "A firm must have a trust letter from any bank holding its client money to ensure that, in the event of the firm's insolvency, client money is clearly identifiable and is ring-fenced from the firm's own assets so that it can be promptly returned."
The watchdog said that between October 2006 and March 2010, BIM failed to obtain such letters in relation to some of the money market deposits it placed with third-party banks.
The error occurred as a result of systems changes following the Blackrock group's acquisition of BIM, which had previously been known as Merrill Lynch Investment Managers Limited.
"Despite being part of one of the largest asset managers in the world, BIM's systems were simply not adequate, and the basic step of notifying banks that the money was held on trust for clients was not done," said Tracey McDermott, FSA director of enforcement and financial crime.
"This is not the first time we have seen the impact on client money overlooked as part of a reorganisation. The fine imposed today should remind all firms of the critical importance we place on ensuring proper protection of client money at all times."
Blackrock said fiduciary commitment to its clients was at the heart of its business.
"As the FSA itself noted, the situation that led to this settlement was not deliberate and no clients suffered any losses as a result of the error.
"Still, we regret this instance where our UK 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."