SEC exams now focusing on private fund valuations (Private Funds CFO)

SEC sweep exams of private fund advisers are underway with a big focus on valuations. The exams are concentrated on previously stated concerns with valuations of private credit funds as well as equity funds, leading to the review of additional areas such as fees and expenses, conflicts of interest, disclosures and marketing. The SEC’s sweep exam document request seeks a firm’s valuation policies, data and testing to review for consistency with valuation processes, appropriate disclosures with clients, and whether there are instances of overcharging management fees and carried interest from overvalued holdings. SEC enforcement has also stepped in to support the exams, adding another layer to the reviews and interviews with additional questions. See Private Funds CFO (free registration), “SEC zeroes in on private funds valuations”