Key Takeaways
- • The SEC's Office of the Chief Accountant and Division of Investment Management issued a joint statement urging asset managers, auditors, and market participants to strengthen valuation practices for private assets, though no new requirements were introduced.
- • Private credit assets held by registered funds have surged from $170 billion in December 2020 to $270 billion in December 2025, making the asset class a particular focus for the SEC's scrutiny given illiquid underlying markets and limited observable pricing.
- • Liquidity pressures across private markets have intensified, with some funds restricting redemptions and limiting investor access to capital, raising questions about whether current valuation assumptions remain appropriate under stressed market conditions.
- • The SEC expects firms to maintain robust valuation policies, provide meaningful disclosure to investors about assumptions and risks underlying private asset valuations, and called on auditors to actively challenge management judgements on fair-value estimates.
- • The regulatory reminder addresses the tension between private market managers' efforts to expand access to retail and retirement savers while funds face extended holding periods and increasing investor demands for liquidity exits.
Summary
The Securities and Exchange Commission has reminded asset managers, auditors, and other market participants to strengthen their approach to valuing private assets and communicating those valuations to investors. A joint statement from the SEC's Office of the Chief Accountant and Division of Investment Management, reported by Bloomberg, does not establish new regulatory requirements but emphasizes existing obligations around fair-value measurement and disclosure that firms must observe.
The guidance underscores growing concerns about private asset valuations as liquidity pressures mount across private markets. The SEC stated that it expects firms to maintain robust valuation policies and procedures while providing investors with meaningful information about the underlying assumptions, judgements, and risks embedded in private asset valuations. The regulator also expanded the role of auditors, calling on them to challenge management judgements around fair-value estimates and assess whether assumptions remain appropriate as market conditions evolve.
Private credit has emerged as a particular area of regulatory focus. Assets held by registered funds in private credit have increased substantially in recent years, climbing from $170 billion in December 2020 to $270 billion in December 2025, according to the SEC. The asset class presents distinct valuation challenges because underlying markets are often illiquid and many loans lack readily observable market prices, making fair-value determination more complex and subjective.
Liquidity constraints have become an acute issue for private credit and broader private market funds. Redemption requests have forced some vehicles to restrict withdrawals or otherwise limit investors' ability to access their capital, introducing questions about whether current valuation assumptions accurately reflect the difficulty of monetizing assets in stressed environments. This challenge has coincided with private market managers' expansion efforts to provide greater access to private investments among individual investors and retirement savers—creating a structural tension between growing retail participation and constrained exit liquidity.
The SEC's statement reflects a measured approach: reinforcing existing expectations rather than imposing new rules, but signaling heightened regulatory attention to how private asset valuations are determined and disclosed at a time when the industry's rapid growth and liquidity pressures have heightened investor protection concerns.
The guidance underscores growing concerns about private asset valuations as liquidity pressures mount across private markets. The SEC stated that it expects firms to maintain robust valuation policies and procedures while providing investors with meaningful information about the underlying assumptions, judgements, and risks embedded in private asset valuations. The regulator also expanded the role of auditors, calling on them to challenge management judgements around fair-value estimates and assess whether assumptions remain appropriate as market conditions evolve.
Private credit has emerged as a particular area of regulatory focus. Assets held by registered funds in private credit have increased substantially in recent years, climbing from $170 billion in December 2020 to $270 billion in December 2025, according to the SEC. The asset class presents distinct valuation challenges because underlying markets are often illiquid and many loans lack readily observable market prices, making fair-value determination more complex and subjective.
Liquidity constraints have become an acute issue for private credit and broader private market funds. Redemption requests have forced some vehicles to restrict withdrawals or otherwise limit investors' ability to access their capital, introducing questions about whether current valuation assumptions accurately reflect the difficulty of monetizing assets in stressed environments. This challenge has coincided with private market managers' expansion efforts to provide greater access to private investments among individual investors and retirement savers—creating a structural tension between growing retail participation and constrained exit liquidity.
The SEC's statement reflects a measured approach: reinforcing existing expectations rather than imposing new rules, but signaling heightened regulatory attention to how private asset valuations are determined and disclosed at a time when the industry's rapid growth and liquidity pressures have heightened investor protection concerns.
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