BlackRock’s Leaky “Chinese Wall”

As BlackRock’s power and influence grew during the height of the global financial crisis, so too did questions about whether the company was leveraging its privileged access to government decision-makers for its own benefit.

As Senator Chuck Grassley noted in 2009, BlackRock has “access to information when the Federal Reserve will try to sell securities, and what price they will accept. And they have intricate financial relations with people across the globe. The potential for a conflict of interest is great and it is just very difficult to police.”

A 2009 story in the New York Times noted that BlackRock’s advice to the Federal Reserve did in fact help the company: “In its role as an informal adviser, it urged the Fed to intervene in the markets in a way that made investors feel it was safe to put money back into money market funds, including BlackRock’s.”

The company’s unique advisory role to the Fed prompted the New York Times to ask, “Can a company that is being paid to price and sell troubled assets for the government buy the same kinds of assets for private clients without showing preference? And should the government seek counsel from a company whose clients stand to make or lose billions if those policies are enacted?”

Can a company that is being paid to price and sell troubled assets for the government buy the same kinds of assets for private clients without showing preference? And should the government seek counsel from a company whose clients stand to make or lose billions if those policies are enacted?

For its part, BlackRock and Mr. Fink have always said that the firm carefully manages its potential conflicts through a “Chinese Wall” that separates the company’s advisory business from its asset-management business. An analysis of BlackRock statements, marketing materials, and executive profiles indicate, however, that the company’s assurances may have little weight in practice.

As early as 2006, BlackRock Solutions aggressively touted its “close ties between our investment and non-investment activities” as an “important driver of our long-term success” (page 6). Marketing materials boast of the company’s “One BlackRock culture, which emphasizes partnership across functions, communications, transparency, consistent standards and teamwork (P. 8)1.”

BlackRock Organization chart

2011 BlackRock Marketing Presentation touting the company’s “One BlackRock” culture

In 2013, The Economist reported that the company’s marketing presentations often “boast of the ‘access advantage’ enjoyed by BlackRock, using ‘deep relationships with government and corporate issuers’ to put it ‘in the flow of the most current information.’”

The company often touts the benefit of its government access for clients as well: “As a fiduciary to our clients, it is our job to maintain strong, deep relationships with governments around the world irrespective of party affiliations. We have done that for more than 25 years and will continue to do so,” BlackRock wrote in a press statement in a 2016.

And Mr. Fink often boasts of BlackRock’s “deep relationships” and “conversations with political [leaders]” to help BlackRock clients build wealth.

Larry Fink Interview with Block Chain Federation

2017 Larry Fink interview with Blockchain Federation

A January 2008 letter from the certified financial analyst for the State Universities Retirement System of Illinois included a more troubling observation, noting that internal personnel transfers to BlackRock’s asset management division typically came from BlackRock Solutions, the very division evaluating the purchase and sale of billions of dollars of assets on behalf of the U.S government at the time.

January 2008 Letter

Former Swiss National Bank Chairman, Phillipp Hildebrand

Another alarming conflict of interest for the company stems from the multiple hats worn by Philipp Hildebrand, a key BlackRock executive and former head of the Swiss National Bank who was forced to resign amid an insider trading scandal.

According to various news sources as well as a BlackRock executive profile on its website, Mr. Hildebrand, who originally oversaw the Client Solutions Group providing investment advice to institutional investors, was promoted in March 2018 to oversee BlackRock Solutions’ Financial Markets Advisory group – the BlackRock division handling the firm’s most sensitive work advising governments and central banks.

In Mr. Hildebrand’s new role, he will also oversee a new portfolio research group within the BlackRock Investment Institute to develop a “unified set of portfolio construction and asset allocation best practices built around a single set of market assumptions, optimization models and investment principles,” according to an internal BlackRock memo.

Before joining BlackRock, in January 2012, Mr. Hildebrand was forced to resign as the head of the Swiss National Bank over a scandal concerning his wife’s sale of 400,000 Swiss francs and purchase of U.S. dollars. Ms. Hildebrand’s sale came only three weeks before her husband presided over a plan to cap the rise of the franc. Eventually, she later sold the dollars at a substantial profit.

While Mr. Hildebrand was ultimately cleared by the SNB of insider trading, emails concerning the trade, which  were released after the SNB had concluded its investigation, indicate he was aware of, and may have even approved, his wife’s transaction. Moreover, Hildebrand’s resignation came the same day he was scheduled to meet with a Swiss parliamentary committee to determine whether he and his wife may have made additional questionable trades.

On August 15, 2011, Mr. Hildebrand’s wife emailed Felix Scheuber, her client advisor at Bank Sarasin, “We would like to get out (sic) dollar exposure up to 50% in our account.”

Kashya Hildebrand email

Mr. Scheuber replied that while he had executed the trade, in order to comply with Swiss banking rules he required Mr. Hildebrand’s signature on a disclosure form that he would mail to his office.

The next day Mr. Hildebrand emailed Mr. Scheuber that he was “surprised” by the transaction. Mr. Scheuber reminded him, “I also remember you saying in our yesterday’s conversation that if Kashya wants to increase the USD exposure then it is fine with you.”

Felix Email


In fact, contemporaneous notes taken by Mr. Scheuber after his conversation with Mr. Hildebrand on August 15 appear to confirm his account.

Several BlackRock Employees Permeate the Company’s Chinese Wall

A review of several LinkedIn profiles of BlackRock employees confirms that they appear to move freely between the advisory side of the business handling sensitive work for governments and the asset management divisions.

Lili Forouraghi, for instance, is a managing director who works with BlackRock’s asset management team for the company’s institutional client business.  She previously worked as an advisor to public sector entities including central banks and finance ministries.

Before moving to the other side of the firewall in February 2015, Ms. Forouraghi worked for five years in BlackRock’s Financial Markets Advisory group, where she was in charge of the company’s business advising ministries of finance, central banks and other American and European public entities. She was part of a team advising the Central Bank of Cyprus in 2013 according to an email exchange between BlackRock and Cypriot officials.

Lili Forouraghi experience


Wayne Fitzgerald, another BlackRock managing director responsible for managing BlackRock’s global real estate debt and securities operations, previously served as a real estate specialist in BlackRock Solutions’ Financial Markets Advisory Group.

Wayne Fitzgerald Experience


Another former employee, Olivier Defaux, served as a senior manager of BlackRock Solutions’ FMA division where he worked with governments and central banks in Europe – including as an advisor to the central banks of Ireland and Greece — before moving to the other side of the firewall as the managing director of the Financial Institutions Group and later head of European Mortgage Strategies.

Olivier Defaux

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