SEC Highlights Valuation Risks in Hard-to-Value Private Assets
The SEC has issued a new statement on fair-value measurement and disclosure for private assets, with particular attention to private credit. The agency emphasized that these assets are often illiquid, individually negotiated and supported by limited observable pricing, placing greater weight on assumptions, calibration, disclosure and professional judgment. It also stressed that management remains responsible for fair value even when information is incomplete, and that auditors should reassess prior assumptions as market conditions change.
CMRA Perspective
For hard-to-value assets, the challenge is not simply the model. When observable prices are limited, the quality of the valuation increasingly depends on the assumptions, market evidence, independent challenge and governance surrounding the process.
For CMRA Partner Peter Niculescu, this is a familiar issue. His work has long involved difficult-to-value securities, loans and derivatives across liquid, illiquid and stressed markets.
These valuation issues can also become central in complex financial disputes, where assumptions, methodology and market evidence may be subject to independent expert review.
As observable market evidence weakens, valuation processes need stronger assumptions, calibration, independent challenge and governance—not simply greater reliance on model outputs.
Related CMRA Insight
Are your pricing policies and procedures for less liquid instruments adequate? – the SEC is looking