More than 1,400 advisers received US stimulus loans of at least $ 150,000

July 6, 2020

According to the Small Business Administration, more than 1,400 financial advisory firms received potentially forgivable government-backed Paycheck Protection Program loans of at least $ 150,000.

The government on Monday revealed the names of the advisory firms among a list of more than 5 million small businesses that Democratic members of Congress pressured the White House to publish.

The stimulus money was intended to preserve company jobs. with less than 500 employees, but the program generated controversy when larger entities and some that were profitable, applied and were approved. Several well-known firms, such as the $ 12 billion Carson Group of assets in Nebraska, which took between $ 2 million and $ 5 million, It had previously revealed that they took loans in the early days of the pandemic as a precaution.

Some, including the $ 1.3 billion asset Ritholtz Wealth Management in New York: They’ve repaid their loans with interest amid criticism for taking the money.

Loan advocates have said they were earning employee points and modeling strong planning skills for clients by taking advantage of government-sponsored generosity at a time of great uncertainty. Opponents have said that loans Ask questions for clients on the financial management skills and ethics of advisers.

The list released Monday included names of many firms that had not previously disclosed that they took the loans.

For the complete list Click here to download as a spreadsheet.

PPP loans were capped at $ 10 million or 2.5 times a borrower’s payroll, and most RIAs did not disclose the amounts. The list released Monday gives loan ranges. The loans were fully forgiven if 75% was used for payroll purposes within an initial two-month period (extended in a later program).

Among the previously undisclosed prominent recipients on Monday’s list They were Steward Partners Global Advisory, based in Washington DC, which has around 130 brokers. He received between $ 5 million and $ 10 million, according to the data.

Virginia-based PagnatoKarp, an RIA of $ 2.3 billion of assets bought in June for Cresset Asset Management, she received a loan in April of between $ 350,000 and $ 1 million.

He also obtained a loan in the same category with Gerber Kawasaki, based in Santa Monica, California, a RIA of $ 1.1 billion whose founder Ross Gerber tweeted in April the PPP “looks like a scam”.

Gerber said the “scam” comment was about the fees banks were applying to the SBA program, and said his loan helped him avoid laying off six employees in his RIA.

“I will do whatever it takes to protect my company and my employees,” said Gerber.

The government said it has issued almost 661,220 loans of $ 150,000 or more to more than five million borrowers, including more than 1,430 advisers. The SBA grouped financial firms under the North American Industry Classification System code for investment advisers, although it includes a small number of companies that were apparently misclassified.

The Securities and Exchange Commission had told registered investment advisers that they had to disclose the loans in the documents “if the circumstances that led you to seek a PPP loan or other financial assistance constitute material facts related to your advisory relationship with the clients”.

The Financial Industry Regulatory Authority was more liberal and said the loans did not have to be disclosed on U-4 forms as a sign of a financial event because Congress included the concept of forgiveness.