The SEC's message was simple: do the basics better. In a staff statement described as a "critical reminder," the regulator said it will home in on how firms figure out the worth of private holdings and how they explain those numbers and risks to investors. No fresh regulations were added, but the tone was clear about expectations. As the SEC's Office of the Chief Accountant and Investment Management division put it, "Across the valuation and disclosure topics discussed in this statement, the underlying message is the same: robust policies and procedures, paired with material disclosure, help investors understand an entity's fair value process, the judgments involved and the risks associated with private assets."
Wall Street is trying to bring more private investments to everyday investors and retirement savers, yet exits have slowed. A pileup of unsold assets has kept funds holding positions longer than planned, stoking questions about whether some marks are too optimistic. In private credit, managers continue to face ongoing withdrawal pressures; as of midyear, more than $14.5 billion in investor money was locked across over a dozen funds.
The SEC called for "particular care" in private credit. Those loans often trade infrequently and may lack quoted prices, which makes modeling and disclosure do most of the work. According to the agency, holdings of private credit within registered funds have expanded to more than double their 2020 level, reaching $270 billion in December 2025 after standing at $170 billion in December 2020. It also flagged that investors may view it as material when firms spell out which holdings are non-accrual or non-performing, along with details on the status of payment-in-kind interest.
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Auditors were told to challenge management on valuation choices, verify that disclosures are substantive, and revisit assumptions in periods of market stress. As the SEC put it, "The complexity and judgmental nature of these fair value estimates, and their susceptibility to management bias, heighten the importance for auditors to exercise professional skepticism." The guidance added, "Clear, entity‑specific disclosure helps investors better evaluate the judgments underlying these fair value measurements."
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