On April 27, 2020, the Securities and Exchange Commission issued
guidance regarding investment advisory firms' duty to disclose
loans obtained under the Paycheck Protection Program (PPP) created
under Section 1102 of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act. The SEC has concluded that an advisory firm
must disclose to clients that it has taken a PPP loan to counter
the impact of the COVID-19 pandemic in response to Item 18
(Financial Information) of Part 2A of Form ADV (brochure), or as
part of Part 2A, Appendix 1 of Form ADV (wrap fee program
brochure).
https://www.sec.gov/investment/covid-19-response-faq ("SEC
FAQ")
The SEC's position regarding disclosure of PPP loans might
seem to be inconsistent with FINRA's determination that
forgiveness of an approved PPP loan does not trigger a disclosure
obligation in response to Form U4 Question 14K as a
"compromise with creditors."1 However, the
results are not inconsistent because, in essence,
