SEC Officials Address Fair Value Rules for Private Assets
Two senior SEC officials issued guidance on fair value measurement and disclosure for private assets, signaling regulatory scrutiny of valuation practices.
Senior officials at the U.S. Securities and Exchange Commission issued a formal statement addressing fair value measurement and disclosure considerations for private assets, according to a release attributed to Kurt Hohl, Chief Accountant, and Brian Daly, Director of the Division of Investment Management.
The statement signals that regulators are paying close attention to how investment funds and other entities measure and report the value of assets that do not trade on public markets. Private assets — which include private equity holdings, private credit instruments, and other illiquid investments — present unique valuation challenges because observable market prices are often unavailable.
Read more FTC, States Reach Antitrust Settlement With Corteva to Cut Pesticide Costs →
Fair value accounting requires managers to apply judgment-based methodologies when pricing such holdings, an area that has drawn increased scrutiny as private markets have grown substantially in recent years. The involvement of both the SEC's chief accountant and the head of investment management suggests a coordinated, cross-divisional focus on compliance in this space.
Investment advisers, fund managers, and other registrants with significant private asset exposure are likely the primary audience for the guidance. Regulatory statements of this nature typically signal areas where examiners may increase focus during routine reviews or enforcement actions.
Continue reading at Speeches and Statements.
