As securities regulators are increasing focus on individual registered reps and advisers who obtained COVID-19 business relief loans, brokerage firms continue to disclose how much they received last year in the paycheck protection program loans.
In July, InvestmentNews tracked seven small to mid-sized broker–dealers, defined, respectively as those with 100 or less advisers or those with 101 to 500, as receiving anywhere from $150,000 to $2 million from the program; loans were to be used to protect employees’ salaries during the pandemic.
At least one large firm was missed in that tally. National Securities Corp., with more than 700 independent reps, received a PPP loan of $5.5 million last year, according to its annual audited financial statement filed last month with the Securities and Exchange Commission.
For the PPP loans to be forgiven by the federal government, the proceeds of the loans needed to be spent on employees’ salaries, health care costs and other expenses.
The loan program was aimed at buoying businesses with less than 500 employees; while National Securities surpassed that number of reps and advisers, those were not employees, but rather independent contractors.
While InvestmentNews does not have recent data about the number of firm employees at the broker-dealer, it was likely in the range of 300, which the firm reported in 2015. Such a number of full-time employees would have put National Securities in line to apply for and receive a PPP loan.
A spokesperson for National Securities did not return phone calls on Monday to comment.
B. Riley Financial, Inc., a Los Angeles-based diversified financial services firm, this month said it agreed to acquire the remaining 55% of New York-based National Holdings Corp., an investment banking and asset management firm, that it didn’t own already. National Holdings is the parent of National Securities.
Meanwhile, the Financial Industry Regulatory Authority Inc. is probing registered representatives who have obtained coronavirus relief loans for possible violations related to work they do outside their brokerage firms.
Finra is concerned that some reps are receiving federal financial support connected to work they’re doing outside of their brokerage jobs.
Last fall, Wells Fargo fired 100 employees for abusing coronavirus aid and JPMorgan investigated employees and customers for misusing relief funding.
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As our second lead editor, Cindy Hamilton covers health, fitness and other wellness topics. She is also instrumental in making sure the content on the site is clear and accurate for our readers. Cindy received a BA and an MA from NYU.