Page 23 - Investment Advisor - October 2021

RIAs Took $36M in Excess PPP Loans: Study

ew reports show Paycheck “While professional services, such as Advisors received loan amounts
NProtection Program loans secured investment advice, were relatively insu- much greater than payroll needs, the
by advisors and facilitated by fintech lated from completely shuttering opera- report found, and advisors abusing the
firms involved misconduct. More than tions during the pandemic due to the program were also “significantly more
6% — or $36 million — of the $590 mil- ability to operate remotely, investment likely” to disclose a history of past fraud
lion in PPP funds received by those in management firms realized substantial and/or regulatory misconduct.
the investment management industry negative shocks to revenue immediately Another report released in mid-August
violated loan limits as set out in the prior to the rollout of the PPP,” state the by the University of Texas at Austin’s
CARES Act, according to new research. authors, William Beggs of the University McCombs School of Business found that
The study, “Fraud and Abuse in of San Diego and Thuong Harvison of more than 45% of PPP loans from fin-
the Paycheck Protection Program? the University of Arizona, Eller College tech lenders were deemed questionable.
Evidence From Investment Advisory of Management, Department of Finance. The research found that fintech lenders
Firms,” found that nearly a quarter Beggs and Harvison estimate that ramped up their PPP loan market share
of SEC-registered investment advi- “firms procuring abnormally large loans to over 70% of originated loans by April
sors eligible for PPP funds — 2,999 out were overallocated by approximately 2021, and that fintech loans are more
12,643 — received loans totaling more $36 million, about 6%, of the total PPP than 3.5 times as likely to be initiated by
than $590 million. dollar amount received by the industry.” someone with a criminal background.

Captrust, Focus Financial Scoop Up RIAs

aptrust Financial Advisors said it and foundation practice, Ellwood also nated with the Ancora team because of
Cis buying Chicago-based Ellwood will bring its alternative investment our unique focus on empowering the
Associates, which works with about expertise to Captrust, the firms said. entrepreneur and the value-added ser-
200 clients with $85 billion in assets. “When looking for the next step for vices we offer our partner firms,” said
Ellwood’s client base includes endow- Ellwood, we knew we wanted to be Rudy Adolf, founder and CEO of Focus
ments and foundations, retirement plans, a part of a majority employee-owned Financial. “We believe that Ancora will
hospitals, family offices and high-net- firm to continue our own legacy of take full advantage of these resources,
worth individuals. A total of 55 Ellwood employee ownership,” according to positioning it to be a major platform not
employees are set to join Captrust. Ellwood’s Timothy Egan, who will move only in the Midwest but beyond.”
The transaction should close in the to Captrust as a principal. Ancora’s operations include Ancora
fourth quarter of 2021 and represents Advisors ($6.2 billion), Ancora Family
Captrust’s 51st addition since 2006. The FOCUS FINANCIAL TAPS Wealth Advisors ($2 billion), Ancora
deal also gives the RIA its first location ANCORA HOLDINGS Alternatives ($670 million), Ancora
in Chicago, as well as a greater presence In a separate deal, Ancora Holdings, Retirement Plan Advisors and broker-
in Denver. a wealth and investment management dealer Inverness Securities. In addition
Captrust currently has about 900 firm that works with about $9 billion to its Cleveland location, it has offices in
employees, $60 billion in assets under in assets, is joining Focus Financial Naples, Florida, and Detroit.
management and roughly $600 billion Partners, the firms announced. In July, Focus moved to buy three
in assets under advisement. The transaction involving Cleveland- RIAs that manage $3 billion in com-
“Ellwood has long been a firm that based Ancora — which is employee- bined client assets: Sonora Investment
we have admired for their dedica- owned and managed by a seven-person Management, Collins Investment Group
tion to their clients,” said Rick Shoff, executive team led by CEO and Chairman and New Providence Asset Management
Adobe Stock group, in a statement. fourth quarter of 2021. over $250 billion in client assets when
Fred DiSanto — should close in the
in New York. Its partner firms managed
Captrust managing director, advisor
these deals were announced.
In addition to its large endowment
“The value of our partnership reso-
OCTOBER 2021 INVESTMENT ADVISOR 21