BlackRock has thrown its full support behind Nigel Bolton, head of European equities at the fund management giant, after Italian regulators began legal proceedings against him alleging insider trading.
Mr Bolton will keep control of his $14bn portfolio and continue dealing with clients, BlackRock said, and the company is confident he will be exonerated.
Italy’s Commissione Nazionale per le Societa e la Borsa, Consob, claimed that Mr Bolton had non-public information when he sold €315m of shares in oil services group Saipem last January, the day before a devastating profit warning.
The investors who bought Saipem shares from BlackRock, in a block trade organised by Bank of America Merrill Lynch, lost more than €114.5m, according to Consob.
Consob also alleges that BlackRock declined to provide the regulator with information and was an obstacle to Consob’s investigation, something the fund manager denies.
BlackRock said that Mr Bolton’s trade was based on weeks of public speculation about Saipem’s financial position, in the wake of corruption allegations and the resignation of its chief executive. Saipem is controlled by Italy’s state-owned energy firm Eni.
Mr Bolton and his team attempted to gather information from the company and from bank analysts that covered Saipem, but never used non-public information, BlackRock’s internal investigation concluded. The trade was based in part on a third-party analyst research report reducing earnings estimates, which was issued to the market before trading on January 25, it said.
“Insider trading is abhorrent to BlackRock’s values, and we would never tolerate it,” a spokesman for the fund manager said.
“The mere fact that shares were sold shortly before a profit warning is not evidence of insider trading, particularly when the information on which the trade was made was widely available in the marketplace.”
Consob launched civil proceedings against Mr Bolton on January 3, BlackRock revealed in a US regulatory filing late on Friday. The company has not been charged, but may be liable for any wrongdoing by an employee. Under Italian law, fines could be larger than the losses the company avoided.
Mr Bolton, one of the UK’s most influential fund managers, joined BlackRock in 2008 from Scottish Widows, where he had been a director and head of European equities. BlackRock’s European equities team manages $40bn in total.