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Italian regulator brings civil suit against BlackRock fund manager

A BlackRock building is seen in New York June 12, 2009. REUTERS/Eric Thayer
A BlackRock building is seen in New York June 12, 2009. REUTERS/Eric Thayer

By Stephen Jewkes and Chris Vellacott

LONDON/MILAN (Reuters) - BlackRock Inc said on Friday that Italy's market regulator has started civil proceedings against one of its fund managers alleging that he used inside information to sell shares in Saipem just before the oil services firm issued a profit warning in 2013.

Consob, the Italian securities regulator, claimed that Nigel Bolton, a portfolio manager and head of BlackRock Investment Management (UK) Ltd's European Equity Team, used non-public information when he sold more than 2 percent, or about 10.7 million, of Saipem's stock last January.

"While BlackRock is not charged in the proceeding, it may be liable for the actions of its employee," the world's biggest money manager said in a regulatory filing late Friday, adding that it does not believe that Bolton will be found liable.

The sales that BlackRock said took place between January 25 and 29, preceded Saipem's announcement on the 29th that it was cutting its 2012 outlook. That move sparked a more than 30 percent slump in the Italian company's shares.

The regulator claimed the sale avoided over 114.5 million euros ($156.54 million) in BlackRock client losses.

Following an internal investigation, BlackRock said it believes the sale was made based on widely disseminated, public information, including a third-party analyst research report reducing Saipem's earnings estimates.

"Insider trading is abhorrent to BlackRock's values, and we would never tolerate it," the investment firm said in an emailed statement in response to an earlier Reuters report that the regulator had launched a probe.

BlackRock in its filing said Consob also alleged that the firm declined to provide it with information and was an obstacle to the regulator's investigation.

The fund manager said it believes it has fully cooperated with Consob, and that it will continue to do so.

Consob opened an initial probe into the profit warning and subsequent share sales last February.

Consob declined to comment on Friday. Saipem, which is 43 percent owned by Italian oil major Eni, also declined to comment.

Saipem, which cut its outlook for a second time in June, is embroiled in a corruption probe over allegations it paid bribes to win contracts in Algeria. Saipem has denied any wrongdoing.

News of that probe, which emerged in December 2012, led to the ousting of Saipem's long-standing chief executive Pietro Franco Tali and his replacement by Umberto Vergine.

The corruption allegations, along with concerns that a new management team could uncover more bad news, prompted several funds to sell their shares in the oil services company at the end of 2012.

BlackRock shares closed at $314.94 on Friday on the New York Stock Exchange. ($1 = 0.7314 euros)

(Additional reporting by Avik Das in Bangalore; Editing by Erica Billingham and Anthony Kurian)

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