SEC Warns Firms to Improve Private Asset Valuation and Disclosures
From the desk of Jim Eccleston at Eccleston Law
The Securities and Exchange Commission (SEC) is pressing financial firms to take greater care when valuing private assets as liquidity tightens and investor redemption requests increase, according to AdvisorHub.
The SEC urges firms to maintain robust policies and procedures and to provide material disclosures that help investors understand how they determine fair value, what judgments those determinations require and what risks private assets present.
The warning comes as financial firms expand private market products to a broader group of investors, including individuals and retirement accounts. According to AdvisorHub, a backlog of unsold assets has forced some funds to hold investments longer than expected, raising questions about whether reported values accurately reflect market conditions.
Private credit has drawn particular scrutiny. The SEC said those investments require "particular care" because the underlying markets are illiquid and some loans lack readily available price quotes, AdvisorHub reports.
Private credit investments held by registered funds increased from $170 billion in December 2020 to $270 billion in December 2025, according to the SEC. At the same time, AdvisorHub reports that more than $14.5 billion in investor capital remained trapped at more than a dozen private credit funds as of midyear amid heavy redemption requests.
The SEC also directed its message to auditors. The agency said auditors should closely evaluate management judgments, test whether disclosures provide sufficient information and reconsider earlier assumptions when market conditions change.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, sec compliance, private asset valuation, regulatory disclosures, securities regulation, liquidity risk
