The SEC headquarters in Washington. (Photo:ALM)
The Securities and Exchange Commission is conducting a sweep ofpublic companies that have received funds from loans under the Paycheck Protection Program.
|"I believe there's a sweep from enforcement seeking informationfrom public companies about their receipt of PPP funds," IvanKnauer, partner at Snell & Wilmer LLP in Washington, toldBenefitsPRO's sister publication ThinkAdvisor Thursday.
|The agency's enforcement division in Washington is makingvoluntary inquiries regarding information that would demonstratequalifications to receive a PPP loan, including the impact ofCOVID-19 on the business, among other relateddocument and information requests, according to a person who hasseen a letter the SEC sent regarding its probe.
|The letter is entitled, in the "Matter of Certain PaycheckProtection Program Loan Recipients."
|The SEC declined to comment.
|Knauer said advisors that have applied for and receivedPPP funds should "not be surprised if OCIE examinersraised questions about this during their next examination. But asof now, it appears the inquiry by the enforcement division isfocused on public companies."
|The agency's Investment Management Division said in recently updated FAQ guidance thatregistered investment advisors taking PPP loans must disclose suchinformation on their Form ADVs if the circumstances leading thefirm to seek the loan or other type of financial assistance"constitute material facts relating to your advisory relationshipwith clients."
|What exactly the SEC means by "material" was unclear, butadvisors should err on the side of disclosure, two experts whoeducate advisors and clients on PPP loans said.
|In an update to its COVID-19 frequently asked questionsguidance, the IM stated in Question II.4 that RIAs "should providedisclosure of, for example, the nature, amounts and effects of suchassistance" as securing a PPP loan.
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2023. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
