Private Credit Scrutiny Intensifies
Summary: In recent weeks, Chairman Atkins has made several statements regarding the private credit industry. Specifically, in his remarks at the Economic Club of Washington, Chairman Atkins stated in no uncertain terms that “opacity in th[e] space can be an issue” and “valuation, transparency, and credit quality are key. That higher fees and less liquidity must be taken into account regarding the appropriateness of an investment.” In addition, Chairman Atkins recently confirmed publicly what those in the space have seen in recent months: the Commission is actively looking into firms in the industry, through both increased examination and enforcement activity.
- This represents a marked departure from Chairman Atkins’ prior statements in which he pushed back on the notion that private credit poses a threat to the market; specifically Chairman Atkins has opined that private credit does not pose systemic risk, and instead, private credit investors “have to be willing to take a loss” and “[i]f you cannot take the heat, get out of the kitchen.”
Takeaway: Viewed in the aggregate with recent media attention on the private credit industry, specifically firms’ reporting and valuation practices, the spotlight on private credit is likely to continue.
Best Practice Tip: Private credit advisers should take proactive steps to get their house in order. We suggest reviewing and updating internal policies and procedures, in particular those involving valuation and investor reporting.
SEC Proposes Long-Expected Changes to Form PF
Summary: On April 20, 2026, the SEC and CFTC jointly proposed amendments to Form PF that would significantly reduce reporting burdens for private fund advisers. Among other notable changes, the proposal would raise the general filing threshold from $150 million to $1 billion in private fund AUM and increase the large hedge fund adviser threshold from $1.5 billion to $10 billion in hedge fund AUM—which has the potential to reduce the number of large hedge fund adviser filers by 65%.
- In addition, the reporting requirements would be materially less burdensome. For example, the proposal would eliminate Section 6 event reporting for private equity fund advisers (covering adviser-led secondaries and GP removal events) and narrow Section 5 current reporting obligations for large hedge fund advisers. Additionally, the proposal narrows the scope of trading vehicle reporting, relaxes the look-through requirement for indirect exposures, and eliminates certain duplicative reporting items for large hedge fund advisers.
- Finally, the proposal seeks comment from those that invest in the private credit space on whether enhanced reporting requirements should be introduced for private credit funds.
Takeaway: The proposal reflects the Atkins-led SEC’s effort to streamline Form PF and is further evidence of the Commission’s efforts to reduce compliance burdens. The proposal stands in marked contrast to the multiple rounds of amendments adopted under former Chair Gensler.
Best Practice Tip: During this transition period, advisers should take advantage of the time to review existing Form PF compliance programs, and assess what changes could be made to strengthen them. In addition, consider participating in the comment process—particularly those advisers to private credit funds.
Lessons to Be Learned From Insider Trading Bust
Summary: On May 6, the U.S. Attorney’s Office for the District of Massachusetts and SEC announced parallel actions charging individuals in a decade-long insider trading scheme that generated millions of dollars in illicit profits. The DOJ charged 30 individuals and the SEC charged 21, including corporate attorneys and other financial professionals. The defendants are alleged to have stolen and traded on confidential information related to M&A deals from several major law firms. Specifically, the corporate attorney defendants are alleged to have accessed confidential documents through their law firms’ internal document management systems and then passed tips to a network of traders and intermediaries in exchange for kickbacks.
Takeaway: In any professional environment—including at asset managers—where MNPI is by definition regularly discussed and documented, information security protocols—including controls on who can see what and with what permissions—are critically important.
Best Practice Tip: This case is a good reminder to revisit current MNPI and information barrier protocols and look for opportunities to strengthen policies and procedures.
Prepared by Your Simpson Thacher Asset Management Regulatory and Enforcement Team»