SEC Officials Address Fair Value Rules for Private Assets
SEC's chief accountant and investment management director issued guidance on fair value measurement and disclosure for private assets.
The U.S. Securities and Exchange Commission's Chief Accountant Kurt Hohl and Brian Daly, Director of the Division of Investment Management, issued a joint statement addressing fair value measurement and disclosure considerations for private assets, signaling heightened regulatory attention to how investment funds account for illiquid holdings.
The statement comes as private markets have expanded rapidly in recent years, drawing growing scrutiny from regulators concerned that investors may not be receiving adequate transparency into how hard-to-value assets are priced on fund balance sheets. Fair value measurement of private assets — including private equity, private credit, and other alternatives — has long been a complex area given the absence of readily observable market prices.
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By issuing formal guidance at the senior staff level, the SEC is underscoring that existing accounting standards and disclosure obligations apply rigorously to private asset valuations. Fund managers and their auditors are expected to ensure that methodologies used to determine fair value are consistent, well-documented, and clearly communicated to investors through required disclosures.
The involvement of both the accounting and investment management divisions suggests the SEC is approaching the issue from multiple regulatory angles, potentially foreshadowing broader enforcement attention or rulemaking in the private funds space. Investment advisers managing private funds have faced increasing SEC scrutiny in recent years over valuation practices, conflicts of interest, and fee transparency.
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