RIA’s $ 36 Million PPP Loans Broke Loan Limits: A Study



man with dollar signs over his eyes (Photo: Shutterstock)

New reports show Payroll protection program loans secured by consultants and provided by fintech companies were associated with misconduct.

More than 6% – or $ 36 million – of the $ 590 million in PPP funds received by the investment management industry has violated the CARES Act loan limits, according to a new study.

IN study, “Fraud and abuse in the payroll protection program? Testimonials from Investment Advisory Firms ”found that nearly a quarter of SEC-registered investment advisors eligible for PPP funds – 2,999 out of 12,643 – received loans totaling more than $ 590 million.

The study was first reported by InvestmentNews.

“While professional services such as investment advisory services were relatively isolated from fully closed operations during the pandemic due to the ability to work remotely, investment management firms realized significant negative shocks to earnings just prior to PPP deployments,” the authors state. … , William Beggs of the University of San Diego and Tuong Harvison of the University of Arizona, Eller College of Management, Department of Finance.

Beggs and Harvison estimate that “oversized firms have been reallocated by about $ 36 million, which is about 6% of the total PPP dollars received by the industry.”

The consultants received loans far in excess of wage requirements, the report said, and advisers who misused the program also “significantly more often” disclosed a history of past fraud and / or regulatory violations.

Another report released on tuesday The University of Texas at the McCombs School of Business in Austin found that over 45% of PPP loans from fintech lenders were deemed doubtful.

The study showed that fintech lenders increased their share of the PPP loan market to over 70% of loans issued by April 2021, and that the likelihood that fintech loans will be initiated by persons with a criminal record is more than 3.5 times higher. …


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