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Carson Group, the $12-billion investment management firm that once touted itself as the new “Amazon of financial services,” secured a forgivable Paycheck Protection Program (PPP) loan from the U.S. government. So did the $6.3-billion Cornerstone Advisors Asset Management and Creative Financial Designs, which handles $1.4 billion in assets.
Dozens of investment management companies rolling in cash after a ten-year bull market have applied for and received federal bailout funds.
“It’s absolutely ridiculous and one of the most disheartening things I’ve seen in my career,” said Patrick Rush, CEO of Triad Financial Advisors, with $700 million under management.
Most investment management companies, even the wealthiest, operate with relatively small staffs, qualifying them as “small businesses” eligible for PPP loans.
Companies also could qualify for federal aid if the economic crisis caused them reasonably to expect a loss of revenue. Investment managers typically charge clients a percentage of their funds being managed. As investment markets crashed and clients withdrew funds, investment companies could make a case that their revenue would shrink.
Now that U.S. stock markets have restored much of their losses, investment managers have not seen the scale of loss they forecast when they applied for their loans.
The $2-billion Chicago Capital LLC pocketed $185,000 in funding in April but had second thoughts when the Los Angeles Lakers were publicly shamed for grabbing a $4.6-billion federal loan.
The Chicago firm gave back the money a week after receiving it.
Other organizations from Harvard University to Shake Shack also gave back their money after being publicly called out.
But others have no qualms about keeping the money.
“The purpose of this was to protect employees and jobs,” said Jamie Hopkins, a Carson Group managing director. “We made the right call. We would’ve let people go otherwise.”
The company has canceled 80 events so far this year and said it used the federal aid to keep employees in that division on the payroll. Hopkins added that none of the money was paid to workers in its investment management group.
Ritholz Wealth Management, which oversees $1.3 billion in assets, also will return its PPP loan.
“The economy is reopening; my clients seem OK for the most part,” said CEO Josh Brown, adding that he will repay the loan. “Firms that have not had a revenue hit shouldn’t apply for forgiveness unless they have no morality now.”

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