SEC Chief Accountant Kurt Hohl and Division of Investment Management Director Brian Daly released a joint statement on September 28, 2026, on valuing private assets, with a focus on private credit.1 The statement does not create any new rules, but the message is unmistakable: get valuation right, because the SEC is watching. The statement names registered closed-end funds, interval funds, tender offer funds, BDCs, and private funds filing under the Exchange Act, though it applies to any registrant, including investment advisers, holding private credit.
Why Now?
Private credit in registered fund portfolios grew nearly 60 percent in five years, climbing from about $170 billion in late 2020 to roughly $270 billion by the end of 2025. Most private credit loans are "Level 3" assets, where there's no quoted market price. Therefore, valuation comes down to models, assumptions, and judgment. The SEC wants to ensure that judgment is properly exercised.
Three Valuation Themes
1. Incomplete information is no excuse: Borrowers aren't always prompt with financials, but that doesn't let management off the hook. Loan agreements should require regular reporting. When data is late or missing, go get it.
2. Value like a buyer would: Fair value means what a market participant would pay, not what management hopes. Credit spreads, liquidity, and risk premiums all matter. Internal projections on their own won't do.
3. Calibrate early and often: The transaction price is the starting benchmark, and the model should match it. After that, make sure that your models still track market data.
Better Disclosure
Investors want to know how a fund values private credit: what techniques, what assumptions, and how much those valuations might move if key inputs change. Boilerplate disclosures do not suffice. Disclosures should also cover portfolio health, including loan modifications, restructurings, extensions, non-accrual status, and paid-in-kind (PIK) interest. These details tell investors whether reported income is actually cash or something else.
The SEC Staff's statement focuses on two areas here. First, non-accrual: what triggers the classification, when accrual stops, and how uncollected interest is handled. Second, PIK interest, where borrowers "pay" by adding to the loan balance. PIK can signal distress, and it means exposure keeps growing even while income is booked. Investors should be able to tell which funds are collecting real dollars and which are receiving paper income.
Some funds rely on a portfolio company's reported NAV as a "practical expedient." That works only if the underlying fund calculates NAV properly and a market sale at a different price isn't likely. The expedient is optional and applies investment by investment. When used, the SEC expects an ongoing assessment of the underlying fund's policies, market shifts, and secondary market pricing. The secondary market grew 42 percent between 2024 and 2025, reaching roughly $220 billion, and can offer pricing signals that either support or undercut the NAV being used.
Auditors Take Note
This SEC Staff statement doesn't just call out fund managers. Level 3 asset valuations are subjective and can be swayed by management's interests, so PCAOB standards call for auditor skepticism. Auditors should test assumptions, test data, and remember that this isn't a one-time exercise. When markets move, or new facts emerge, the audit plan may need to change. If management relies on a portfolio company's NAV, dig into how reliable that number really is. Where did it come from? Has management adjusted it? What controls are in place?
What To Do Now
- Revisit valuation policies to make sure they address information quality, the market participant perspective, and calibration.
- Overhaul boilerplate disclosures by describing how you actually value the portfolio, which inputs matter, and how changes affect values.
- Give investors a clear credit picture with non-accruals, PIK arrangements, modifications, and restructurings.
- Pressure-test the NAV shortcut if you're using another fund's reported NAV, especially as secondary market data becomes more available.
- Audit with fresh eyes, making sure risk assessments reflect today's market and that evidence supports such assessments.
The Bottom Line
None of this is new. But the SEC Staff's statement sends a clear message: fair value rules need to be followed carefully by fund managers, boards, valuation committees, and auditors alike. We believe now is the time to tighten up your valuation policies and procedures, rather than explaining to the SEC why you didn't at your next exam. If you have questions about the SEC Staff's statement or would like to discuss its implications for your valuation, disclosure, or audit practices, please contact Paul J. Foley, Cole Beaubouef, John M. Faust, Kiki Scarff, or any member of the Fund Formation and Investment Management team.
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1 See Securities and Exchange Commission, Statement on Fair Value Measurement and Disclosure Considerations for Private Assets, available at https://www.sec.gov/newsroom/speeches-statements/hohl-daley-statement-fair-value-measurement-disclosure-considerations-private-assets-092806 (Sept. 28, 2026).