The U.S. Securities and Exchange Commission issued a statement on Monday reminding the financial industry to strengthen valuation work around private assets that have become harder to sell as redemption requests rise. The agency did not introduce new rules, but the statement was widely framed as an important reminder about existing regulatory requirements. The move signals that the SEC is paying close attention to how firms determine the value of assets they hold and how those valuations, along with related risks, are disclosed to investors. In a joint statement, the SEC’s Office of the Chief Accountant and Division of Investment Management said that sound policies and procedures, together with sufficient material disclosures, help investors understand an entity’s fair value process, the judgments involved, and the risks tied to private assets.
The U.S. Securities and Exchange Commission has issued a reminder to the financial industry on the valuation of private assets that are difficult to price.
As private assets become harder to sell and investor redemption requests increase, the main Wall Street regulator is urging firms to step up their valuation work for those holdings. The SEC released a statement on Monday covering existing regulatory requirements. It did not set out new rules, but it was seen as an important reminder.
The statement points to an area the agency is watching closely: how firms determine the value of the assets they hold, and how they disclose those valuations and the related risks to investors.
In a joint statement, the SEC’s Office of the Chief Accountant and Division of Investment Management said: “The central message across the valuation and disclosure matters discussed in this statement is consistent: sound policies and procedures, together with sufficient material disclosures, help investors understand an entity’s fair value determination process, the judgments involved, and the risks associated with private assets.”
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