What Does the SEC Expect on Private Asset Valuation?

In brief: On September 28, 2026, the staff of the SEC's Office of the Chief Accountant and Division of Investment Management issued what Bloomberg called a “critical” reminder that funds holding hard-to-value private assets must measure fair value rigorously and disclose the risks plainly. The statement adds no new rules. It signals that examiners will scrutinize how firms mark illiquid holdings and how those marks reach investors, as private credit in registered funds has grown to $270 billion.

What did the SEC actually say?

The SEC statement is a reminder, not a rule. Signed by Chief Accountant Kurt Hohl and Division of Investment Management Director Brian Daly, it restates that registrants already required to measure private assets at fair value must do so with discipline, and must disclose the assumptions and risks behind those measurements. Bloomberg reporter Nicola M White summarized the message plainly: the agency is spurring the industry to put more effort into valuing private assets as those holdings become harder to sell and redemption requests rise.

The substance rests on an existing framework. Fair value measurement is the process of estimating what an asset would fetch in an orderly sale when no active market price exists, and for registered funds it is governed by Rule 2a-5 under the Investment Company Act of 1940, adopted in December 2020. That rule requires funds to assess and manage valuation risks, select and test their methodologies, and oversee any pricing services they rely on. The September statement is the staff pointing back at those obligations and telling the market it intends to check the work.

Why is the SEC pressing on this now?

The timing tracks a structural shift in where capital sits. The staff observed that private credit inside registered fund portfolios has grown nearly 60 percent, from $170 billion in December 2020 to $270 billion in December 2025. That figure covers the vehicles most exposed to retail money: registered closed-end funds, interval funds, tender offer funds, and business development companies. The wider market is larger still. Cleary Gottlieb notes that direct lending now matches the syndicated loan market at $1.5 to $2 trillion and is forecast to reach $3 trillion by 2028.

Two pressures converge. First, retail access is widening. An August 2025 executive order directed regulators to open 401(k) plans to alternative assets, and the Department of Labor advanced a proposed rule in March 2026 to that end. Second, liquidity is tightening: McKinsey reports that private equity distributions relative to assets under management fell to around 6 percent, a multi-year low, which means more assets are being held and marked rather than sold and priced. When more households own instruments that trade rarely, the integrity of the mark carries more weight.

How does fair value guidance compare across the relevant frameworks?

Institutions holding private assets answer to more than one authority, and the obligations differ by vehicle and by source. The table below sets out the main reference points an issuer or manager should map against its own book.

The table makes the pattern clear. No single rule was introduced in September 2026. Instead, the staff statement, the examination agenda, and the underlying accounting standard point in one direction: private-asset marks that rest on Level 3 unobservable inputs must be defensible, tested, and legible to the investor and the examiner alike. The gap the SEC is probing is not whether firms have a policy, but whether the policy holds up when the asset cannot be sold and the redemption queue is growing.

What separates a defensible mark from a fragile one?

The difference is traceability. A defensible valuation shows its inputs, records who reviewed them, and explains why the chosen methodology fits the instrument. A fragile one leans on a stale comparable or a manager's judgment that cannot be reconstructed after the fact. The SEC has been circling this distinction for more than a year. In October 2024, top regulators publicly called out valuation risks in private credit, and by April 2026 the agency was monitoring emerging pressures in the space. The September reminder is the next step in that sequence, moving from concern to expectation.

Disclosure is the second half of the test. It is not enough to arrive at a number. Funds must convey to investors how the number was reached and what could move it, particularly the liquidity risk that a stated value may not be realizable on demand. That is precisely the friction the statement addresses: values that look firm on a statement but soften the moment an investor asks to redeem.

What should an institution do with this?

Treat the statement as a preview of the exam, not a footnote. Map every private-asset position to its governing framework, confirm that the methodology behind each Level 3 mark can be reconstructed by someone other than the person who set it, and check that investor disclosures name the liquidity and valuation risks rather than gesturing at them. Where the underlying record is thin, rebuild it before an examiner asks. The institutions that fare best under this scrutiny will be those whose valuations are programmable in their logic, composable across systems, and auditable end to end, which is the standard Issuant is built to support and the direction the SEC has now made unmistakable.