This excerpt taken from the BLK 8-K filed Dec 4, 2009.
VIEs in which the Company is the Primary Beneficiary
The Company has determined it is the primary beneficiary of certain funds as a result of concluding that it is expected to absorb the majority of the variability to cover expected losses in the funds due to its obligation under certain agreements entered into during the year ended December 31, 2008 and 2007, and the nine-month period ended September 30, 2009. Under these agreements, which constitute credit related derivates issued by the Company, the Company is indirectly obligated to make payments to the funds related to a defined pool of assets held by the funds under certain circumstances, including a payment default on a covered asset, a loss on restructuring of a covered asset, or in some cases a loss on the sale of a covered asset. The Company contributed $3 and $0 (unaudited) to the funds to cover realized losses and during the 12 months ended December 31, 2008 and the nine-month period ended September 30, 2009, respectively. The Companys obligation under the agreements is limited to a defined amount, which for some of the agreements increases or decreases over time. As of December 31, 2008 and 2007, under the terms of the agreements, the Company was obligated to cover realized losses of up to $2,720 and $359, respectively, and the fair value of the Companys obligations under the agreements at December 31, 2008 and 2007, was $2,414 and $145, respectively. As of September 30, 2009, under the terms of the agreements, the Company was obligated to cover realized losses of up to $2,317 (unaudited), and their fair value of the Companys obligation under the agreements at September 30, 2009 was $1,252 (unaudited). There is no collateral requirement related to the Companys obligations under the agreements. The agreements expire at various dates through December 2013, and were entered into in order to partially support the funds net asset value per unit.
The Company is not able to sell investments held by consolidated sponsored investments funds in order to obtain cash for use in its operations. Creditors of these VIEs do not have recourse to the Company.
7. Variable Interest Entities (continued)
A summary of the investments held by consolidated funds is as follows: