SEC Officials Address Fair Value Rules 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 specifically for private assets, signaling heightened regulatory attention to an area of growing concern in investment management.

The statement reflects the SEC's focus on ensuring that funds and advisers holding private assets — including private equity, private credit, and other illiquid holdings — apply rigorous and consistent valuation practices. Fair value measurement of private assets has long been a challenge because, unlike publicly traded securities, these instruments lack readily observable market prices.

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By issuing guidance at the staff level through a joint statement, the SEC is underscoring the importance it places on transparency and investor protection in markets where valuations are inherently more subjective and potentially susceptible to conflicts of interest. Disclosure practices surrounding how private assets are valued have come under increasing scrutiny as institutional and retail investors alike have raised their allocations to private markets in recent years.

The involvement of both the Chief Accountant's office and the Division of Investment Management suggests the guidance carries implications spanning accounting standards, fund reporting requirements, and adviser obligations — a broad regulatory reach that market participants will need to evaluate carefully.

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