The SEC headquarters in Washington. (Photo: ALM) The SEC headquarters in Washington. (Photo: ALM)

The Securities and Exchange Commission is conducting a sweep of public companies that have received funds from loans under the Paycheck Protection Program.

“I believe there’s a sweep from enforcement seeking information from public companies about their receipt of PPP funds,” Ivan Knauer, partner at Snell & Wilmer LLP in Washington, told ThinkAdvisor Thursday.

The agency’s enforcement division in Washington is making voluntary inquiries regarding information that would demonstrate qualifications to receive a PPP loan, including the impact of COVID-19 on the business, among other related document and information requests, according to a person who has seen a letter the SEC sent regarding its probe.

The letter is entitled, in the “Matter of Certain Paycheck Protection Program Loan Recipients.”

The SEC declined to comment.

Knauer said advisors that have applied for and received PPP funds should ”not be surprised if OCIE examiners raised questions about this during their next examination. But as of now, it appears the inquiry by the enforcement division is focused on public companies.”

The agency’s Investment Management Division said in recently updated FAQ guidance that registered investment advisors taking PPP loans must disclose such information on their Form ADVs if the circumstances leading the firm to seek the loan or other type of financial assistance “constitute material facts relating to your advisory relationship with clients.”

What exactly the SEC means by “material” was unclear, but advisors should err on the side of disclosure, two experts who educate advisors and clients on PPP loans said.

In an update to its COVID-19 frequently asked questions guidance, the IM stated in Question II.4 that RIAs “should provide disclosure of, for example, the nature, amounts and effects of such assistance” as securing a PPP loan.