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, have issued a joint statement addressing fair value measurement and disclosure considerations specifically related to private assets, signaling heightened regulatory attention to how funds and advisers value illiquid holdings.

Fair value accounting for private assets has long presented challenges for investment managers, as these holdings lack the observable market prices that make valuation of publicly traded securities more straightforward. Regulators and auditors have increasingly scrutinized the methodologies funds use to arrive at reported valuations, particularly as private markets have grown substantially in recent years.

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The joint statement from two senior SEC officials underscores the agency's cross-divisional focus on the issue, combining the accounting expertise of the Office of the Chief Accountant with the regulatory oversight responsibilities of the Division of Investment Management. Such coordinated guidance typically signals that the SEC has identified patterns of concern across filings or examinations.

Investment funds holding private equity, private credit, real estate, or other illiquid instruments are subject to requirements under U.S. generally accepted accounting principles and relevant SEC rules to report holdings at fair value. The accuracy and transparency of those valuations directly affect investor decisions and the integrity of reported fund performance.

Market participants, fund administrators, and compliance professionals are expected to review the statement carefully for any updated expectations regarding documentation, methodology disclosure, and the role of independent valuation specialists. Continue reading at Speeches and Statements.