Private Credit Under SEC Scrutiny as Liquidity Pressures Rise

A recent wave of industry headlines suggests that private credit has entered a more scrutinized and competitive phase. Rising instances of redemption constraints, valuation disputes, and portfolio markdowns are challenging longstanding assumptions about the asset class’s stability, transparency, and resilience.

As semi-liquid vehicles and business development companies continue to attract increasing retail capital, managers are facing heightened expectations around the robustness of their valuation methodologies, liquidity frameworks, and investor disclosures. In this environment, private credit risk extends beyond borrower fundamentals; managers must be able to support their marks, demonstrate consistent valuation practices, manage exits effectively, and communicate these elements clearly to investors. As a result, private credit valuation appears to be receiving increased attention from SEC staff.

On March 4, 2026, the SEC hosted a Private Markets Roundtable focusing on governance, valuation, and other considerations surrounding the retailization of private market investments. During the roundtable, regulators and industry participants highlighted the growing participation of retail investors in private investment products and underscored the implications for valuation and liquidity oversight.

Discussions emphasized that the inherent differences between public and private market valuation methodologies, including timing lags, model-driven inputs, and potential biases, may create challenges for investors attempting to interpret or compare performance across asset classes. Additionally, the semi-liquid features of certain products, combined with discretionary redemption policies, may lead to investor confusion or misaligned expectations regarding access to capital.

Based on these developments, ACA expects the SEC to closely scrutinize valuation programs during examinations of private credit managers, with a focus on the following:

• Inconsistent application of valuation policies, particularly where methodologies differ across strategies or vehicles.
• Overreliance on internal marks without sufficient independent validation or challenge.
• Failure to adjust valuations in distressed, covenant breach, or underperforming scenarios, especially when economic indicators suggest changes in credit quality.
• Potential undisclosed conflicts of interest between valuation outcomes, performance reporting, and fee calculations.
• Internal consistency of valuation assumptions, ensuring that similar assets across vehicles (including those with carried interest features or continuation fund structures) are evaluated using uniform standards.
• Lack of cross-portfolio or trend analysis, particularly where certain loans or credit assets exhibit limited valuation movement or volatility during periods of borrower stress.

ACA supports private credit managers in assessing and strengthening their valuation programs and preparing for regulatory expectations. Our services include:

• Valuation Policy Gap Analysis: A comprehensive review of existing valuation policies and procedures to identify gaps, areas of regulatory sensitivity, and leading practice enhancements.
• Focused Compliance Testing: Evaluation of a manager’s valuation workflows, methodologies, approvals, oversight, and documentation, over a defined period to assess internal consistency and industry alignment.
• Performance Testing Synergies: ACA’s performance verification practice leverages valuation and net asset value data to perform independent performance testing, helping managers validate both the accuracy and integrity of reported results.
• Disclosure Review: Analysis of valuation and pricing-related statements across fund governing documents, regulatory filings, marketing materials, and investor communications to confirm consistency and alignment with actual practices. We also advise on disclosure updates where changes in market conditions, underwriting dynamics, or industry trends warrant revisions.

How ACA Can Help

Private credit managers navigating increased regulatory scrutiny around valuation practices, liquidity structures, and disclosure controls can rely on ACA’s specialized expertise across private markets, performance verification, and distribution. Our team supports managers with evaluating and enhancing valuation programs, preparing for SEC examinations, and ensuring that disclosures, governance, and oversight frameworks align with evolving market conditions and regulatory expectations.

Contact an ACA expert to discuss how we can support your firm’s valuation, compliance, or performance needs.