Federal prosecutors are increasingly focused on valuation practices across private markets, highlighting concerns around transparency in how illiquid assets are marked across private credit and private equity portfolios, according to a report by Reuters citing comments from Jay Clayton, US Attorney for the Southern District of New York.
Speaking at the Bloomberg Global Credit Forum, Clayton said his office and staff are actively asking questions about “marks and transparency of marks” in the private asset space, reflecting rising regulatory attention on how valuations are determined in markets where securities rarely trade.
He noted that discrepancies in valuations for the same underlying assets across different books or managers raise potential concerns, particularly where fee generation is tied to those marks. According to Clayton, ensuring consistency and comparability in pricing is an area where regulators believe improvements can be made.
The comments come amid broader scrutiny of private market valuation methodologies, driven in part by the expansion of retail and wealth channel access to private equity and private credit strategies, as well as growing concerns over opacity in pricing for less liquid instruments.
Clayton said his team is examining whether similar assets are being valued differently across market participants and stressed the importance of addressing potential inconsistencies in reported marks.
He added that engagement with major financial institutions on these issues has been cooperative, noting that firms have generally been willing to provide information when requested and emphasising that senior executives are keen to avoid any perception of improper practices.
The remarks add to a wider regulatory conversation around governance and transparency in private markets, as policymakers and enforcement agencies examine whether valuation frameworks are keeping pace with the rapid growth of the sector.
