Wall Street investment firms scored emergency government loans amid coronavirus pandemic

Many investment and wealth management firms are relatively small, and staff pay varies widely. PHOTO: AFP

BOSTON (REUTERS) - Some investment firms, including those that run hedge funds or manage money for wealthy investors, are among the businesses approved for emergency US government loans to help small companies and non-profits pay employees during the coronavirus lockdown, according to data made public on Monday (July 6).

They included Semper Capital Management, which bets more than US$2 billion (S$2.78 billion) on mortgage and other asset-backed securities; Domini Impact Investments, a mutual fund manager with about US$2 billion under management; Brevet Holdings, a US$1.2 billion lending firm; and Truvvo Wealth Management, which manages more than US$2 billion for large families and institutions.

E-mails to the firms seeking comment were not immediately returned. The data does not track which loans were disbursed, paid back, or if they will qualify for forgiveness.

All told, the US Small Business Administration said in a report on Monday that finance and insurance firms represented US$12.2 billion across 168,462 loans, about 2.3 per cent of the programme's total lending as of June 30. More than 1,400 approved loans were for businesses classified as investment advisors and nearly 600 were for portfolio management companies, according to the data.

Many investment and wealth management firms are relatively small, and staff pay varies widely, often far from the stereotype of the billionaire jet-set financier. Unlike restaurants and hotels, many financial businesses remained open during the coronavirus-related lockdowns and shifted relatively smoothly to remote work.

Investment firms typically earn a percentage of assets under management and profits as fees. The markets rebounded sharply after hitting a low in late March, which would have reversed some of those losses.

The firms disclosed on Monday add to some already revealed in public filings.

Cohen & Company, for example, said in May it had received US$2.2 million under a pay cheque protection programme (PPP), noting its small market capitalisation and lack of access to the public capital markets. The company declined a request for additional comment on Monday beyond its previous statement that, in part because of the loan, it "does not anticipate any significant workforce reduction or reductions in compensation levels in the near future".

Some financial firms initially approved for loans quickly cancelled or returned them amid additional guidance from the Treasury Department and media scrutiny. One was Metacapital Management, according to managing member Deepak Narula.

A spokesman for another hedge fund listed as a recipient in Monday's data, Advent Capital Management, said it explored the idea of taking a PPP loan but never completed an application and did not receive any aid.

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