WHAT’S GOING ON?
Many investment advisers have applied for or accepted a Paycheck Protection Program (“PPP”) loan for their firm. Recently, the SEC provided guidance and updates to frequently asked questions (“FAQs”).
The updates include potential disclosure obligations relating to the Paycheck Protection Program:
PPP Reporting Obligations
- As fiduciaries, investment advisers are required to make full and fair disclosure to clients.
- If a firm receives PPP funding and the funds or the circumstances leading to obtaining the funds are material facts relating to the advisory relationship, this information must be disclosed to clients.
- The information required may consist of the nature, amount, and effects of the PPP assistance.
- If employees responsible for performing advisory functions are receiving the funds, this information should be disclosed to clients.
- If a firm cannot meet its contractual obligations to clients, disclosure must be made in Form ADV Part 2 Item 18 or Appendix 1, as applicable.
WHAT DOES THIS MEAN FOR ME?
We have worked with advisory clients to navigate this process for their firm. If your firm decides to accept the PPP Loan, it important that certain disclosures and documentation are considered as part of this loan acceptance. Please contact Fairview to discuss if you have not done so already.