Fraud and Abuse in the PPP? Evidence from Investment Advisory Firms

49 Pages Posted: 10 Jul 2020 Last revised: 8 Oct 2020

See all articles by William Beggs

William Beggs

University of San Diego School of Business

Thuong Harvison

University of Arizona, Eller College of Management, Department of Finance

Date Written: October 7, 2020

Abstract

This study investigates if fraud and abuse in the Paycheck Protection Program (PPP or the Program) were widespread and predictable using 1,090 large PPP loans made to investment advisory firms registered with the U.S. Securities and Exchange Commission (SEC). We find that an existing, well-established model of investment advisor fraud predicts abnormal PPP loan allocations at a surprisingly similar rate. Advisors receiving abnormal PPP loan allocations had loans approved earlier on average, likely over or understated payroll needs, and were more likely to have a history of past legal and/or regulatory misconduct.

Keywords: Paycheck Protection Program, investment advisors, fraud, COVID

JEL Classification: E61, E65, G21, G23, G38, H32, H81

Suggested Citation

Beggs, William and Harvison, Thuong, Fraud and Abuse in the PPP? Evidence from Investment Advisory Firms (October 7, 2020). Available at SSRN: https://ssrn.com/abstract=3647606 or http://dx.doi.org/10.2139/ssrn.3647606

William Beggs (Contact Author)

University of San Diego School of Business ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States

Thuong Harvison

University of Arizona, Eller College of Management, Department of Finance ( email )

McClelland Hall
P.O. Box 210108
Tuscon, AZ 85721
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
78
Abstract Views
474
rank
344,464
PlumX Metrics