Key facts
- US prosecutors are investigating private market asset valuations.
- The probe focuses on private credit and private equity sectors.
- Concerns about opacity and lack of transparency are driving the investigation.
- Prosecutors seek more transparent valuations, especially when fees are involved.
- U.S. Attorney Jay Clayton stated his office is examining these valuations across the marketplace.
Manhattan's top federal prosecutor, U.S. Attorney Jay Clayton, announced that his office is examining the valuations of assets within private markets, particularly private credit and private equity. The investigation stems from concerns regarding opacity and a lack of transparency, with prosecutors seeking to ensure more robust and understandable valuations. Clayton highlighted instances where assets are marked differently across various balance sheets, questioning valuations that appear significantly higher than others, especially when fees are involved. He noted that his office is looking into these discrepancies across the marketplace. While acknowledging concerns, Clayton also cautioned against excessive worry about private credit, suggesting it has benefited the US economy and that he does not currently see a direct transmission mechanism from private credit issues to the broader economy. Bloomberg reported in May that the Justice Department's Manhattan outpost had sought information about BlackRock TCP Capital Corp., likely related to a significant loan value reduction. Clayton, formerly SEC Chairman, also mentioned Apollo's efforts to price credit assets daily to boost transparency. Clayton suggests that private credit has the potential to perform better regarding transparency and can offer a more effective approach to disclosure compared to existing systems.