A U.S. judge dismissed a lawsuit filed against BlackRock claiming it looted securities-lending revenues from iShares exchange-traded funds investors. The judge further ruled that the plaintiffs did not have a right to bring the case against the money manager in the first place. In a ruling Wednesday, U.S. District Judge Aleta Trauger of Nashville, Tennessee ruled that the Investment Company Act of 1940 prohibits agency relationships like Blackrock's.

According to the complaint filed by the plaintiffs, BlackRock arranged for affiliates of iShares to take 40% or more of securities lending revenues. It also alleged that the money manager sought to recover what it referred to as an "entirely disproportionate" amount.

The lawsuit filed in January claimed that the iShares exchange-traded funds provided "grossly excessive compensation" to BlackRock. Blackrock was hired to advise and manage the funds.

While the judge granted BlackRock's motion to dismiss the case, she also gave the plaintiffs until September 17 to seek permission for filing an amended complaint.