SEC staff from the Office of the Chief Accountant and the Division of Investment Management issued a statement on fair value measurement and disclosure considerations for private assets. The statement offers reminders under FASB ASC Topic 820 and, for certain registrants including business development companies, the Investment Company Act of 1940. It emphasizes that growing accessibility of private assets, including private credit, calls for rigor over how these assets are valued and how valuations and risk characteristics are disclosed to investors.
The staff observed significant growth in private credit through registrant filings and market engagement. Private credit investment within registered fund portfolios grew nearly 60%, from $170 billion in December 2020 to $270 billion in December 2025. The statement notes that exposure to private credit assets is not limited to funds registered under the Investment Company Act and business development companies. Private credit assets are typically illiquid, individually negotiated loans that lack readily available quoted prices, so determining fair value frequently requires significant unobservable inputs and Level 3 categorization.
The statement highlights that management must have access to relevant information in a timely manner, and a lack of timely information does not relieve management of its responsibility to estimate fair value. Management should consider whether reporting provisions in an arrangement are sufficient to support ongoing monitoring and financial reporting. FASB ASC Topic 820 also requires a market participant perspective, meaning management may need to supplement or adjust its own data if it differs from reasonably available information that a market participant would use when pricing the asset.
The statement does not provide new rules or quantify how many registrants may be affected. It remains unknown how individual registrants will adjust their valuation policies, disclosure practices, or borrower reporting provisions in response to the staff's reminders, or whether the staff will pursue additional guidance or enforcement actions based on future filing reviews.