Recent updates from the SEC and FINRA have raised questions among some RIAs about the disclosure of loans made to them under the Paycheck Protection Program (PPP). What are you doing/thinking about these, and the disclosures?
The PPP was established to help small businesses affected by the COVID-19 crisis by covering their near-term operating expenses and providing incentives to retain employees, loans that will be fully forgiven when used for certain expenses, including payroll costs.
Last week the Securities and Exchange Commission advised that, under certain circumstances, registered investment advisors must disclose forgivable loans they have received under the Paycheck Protection Program (PPP). A key phrase there is “certain circumstances”—and by some interpretations, this statement in a new set of FAQs doesn’t actually constitute a change in the agency’s perspective.
“If the circumstances leading you to seek a PPP loan or other type of financial assistance constitute material facts relating to your advisory relationship with clients, it is the staff’s view that your firm should provide disclosure of, for example, the nature, amounts and effects of such assistance,” the FAQ states.
FINRA has that they would not require disclosure of receipt of PPP funds on an individual’s U4.
Considering that the PPP loan payback is approaching, this week we’re wondering if your firm applied for the PPP loans, if you received funds, and if you have any concerns about the potential disclosure of that information.
REPLY to this week’s reader poll at https://www.research.net/r/PPPtake (remember your responses are anonymous)—and we’ll sum it all up for you on Friday!
