{"id":2843,"date":"2026-06-24T16:44:15","date_gmt":"2026-06-24T16:44:15","guid":{"rendered":"https:\/\/reliablemovingcrews.com\/?p=2843"},"modified":"2026-06-24T16:44:15","modified_gmt":"2026-06-24T16:44:15","slug":"us-sec-probes-popular-type-of-private-equity-fund-as-it-steps-up-industry-scrutiny-sources-say","status":"publish","type":"post","link":"https:\/\/reliablemovingcrews.com\/?p=2843","title":{"rendered":"US SEC probes popular type of private equity fund as it steps up industry scrutiny, sources say"},"content":{"rendered":"<div><div><div><ul><li>Summary<\/li><li>Companies<\/li><\/ul><\/div><div><\/div><\/div><div>WASHINGTON, June 24 (Reuters) &#8211; The U.S. Securities and Exchange Commission&#8217;s enforcement division is probing funds typically used by private equity firms and other money managers to hold \u200bon to assets they either cannot or do not wish to sell, as the agency explores potential issues in private markets, said three people familiar with the matter.<\/div><div>In recent \u200cmonths, SEC enforcement staff have homed in on a number of &#8220;continuation vehicles,&#8221; or CVs, said the people, who spoke on condition of anonymity.<\/div><div>They are investigating potential conflicts of interest around the CVs, how managers are valuing the assets, and whether investor disclosures are sufficient and consistent, the three people said. Reuters could not ascertain which specific funds are being investigated or what type of assets they hold.<\/div><div>The enforcement scrutiny into CVs has not previously been reported.<\/div><div>Continuation vehicles have surged in popularity, with \u200bfund manager-led secondary transactions worth $106 billion last year, according to Evercore.<\/div><div>Rising interest rates have made it harder for PE firms to find buyers willing to match the lofty multiples paid for some companies, \u200bespecially during the pandemic when rates were low and money was cheap.<\/div><div>Geopolitical turmoil, policy uncertainty and disruption driven by artificial intelligence have strained sales from private equity \u2060portfolios even further.<\/div><div>Traditional private equity funds have a finite life cycle, usually about a decade. CVs allow managers to find new investors and transfer assets from older funds into a new vehicle, extending the holding \u200bperiod while giving existing investors the option to cash out.<\/div><div>As a result, the vehicles give managers a way to return cash to investors without being forced to sell assets at a deep discount in weak markets \u200bor to a competitor \u2014 or realize potential losses. CVs predominantly deal in equity assets, although the share of credit assets is growing.<\/div><h2>CLOSE COORDINATION AT THE SEC<\/h2><div>Since late last year, staff in the enforcement division have also sought to build what the sources described as an informal &#8220;working group&#8221; with the examinations, investment management and other divisions, to ensure closer coordination and information-sharing on the opaque private credit market, the people said.<\/div><div>While SEC examiners have been scrutinizing private fund issues, including continuation vehicles, \u200bfor some time, the escalation to the enforcement division and the cross-division collaboration underscore growing concerns among watchdogs over potential problems in private markets.<\/div><div>The sources declined to be identified to discuss private enforcement matters.<\/div><div>Managers say \u200bthey typically obtain third-party opinions for CV deals. SEC scrutiny is not evidence of wrongdoing and does not always result in penalties or other action.<\/div><div>At an event last month, SEC Chairman Paul Atkins said the agency is investigating allegations \u200cof fraud \u2060in private credit firms, without elaborating. The agency&#8217;s enforcement director, David Woodcock, also said at an event last month that the agency is &#8220;attuned to potential risks relating to liquidity, fees, valuations, and conflicts of interest\u201d throughout the sector.<\/div><h2>MARKET OVERSIGHT INTENSIFIES<\/h2><div>Watchdogs have increased oversight of private markets as they ballooned over the past decade, but U.S. scrutiny has grown after problems at alternative asset manager Blue Owl (OWL.N)<svg><\/svg><span>, opens new tab<\/span> and BlackRock BLK.N funds late last year sparked fears that cracks are emerging in private credit, one of the people said. Blue Owl and BlackRock declined to comment.<\/div><div>Private credit broadly describes a range of nonbank business lending, although a large chunk of the market comprises \u200bdirect loans to private equity portfolio companies. Estimates of \u200bthe size of the global private credit market \u2060vary but it is generally agreed to be worth at least $1.8 trillion.<\/div><div>Private markets boomed thanks to a decade of near-zero interest rates, which made financing deals cheap. Many private equity firms are now struggling to profitably offload companies.<\/div><div>PE firms are currently sitting on a backlog of more than 30,000 unsold portfolio companies, according \u200bto June data from consultancy Bain &amp; Co. Rolling them into CVs allows private equity firms to bring in new investors and give back some money \u200bto their original backers.<\/div><div>So-called secondary \u2060transactions launched by fund managers, of which CVs make up the majority, were worth $106 billion last year, up from $70 billion in 2024, according to investment bank Evercore. Credit made up 11% of those last year, up from 5% in 2024, said Evercore.<\/div><div>Critics have flagged the potential for conflicts of interest because the investment manager is on both sides of the transaction in what is usually an illiquid asset, creating incentives to skew valuations and raising questions \u2060about whether \u200bmanagers are telling buyers and sellers the same thing.<\/div><div>Some disputes have surfaced in public. The Abu Dhabi Investment Council (ADIC) last year \u200bfiled a legal complaint against a CV launch by Energy &amp; Minerals Group (EMG), accusing the private equity firm of trying to force a conflicted sale. A Delaware court dismissed the case, and the CV deal closed in March.<\/div><div>A representative for EMG said the transaction had \u200bbeen analyzed with advisory firms, and that the claims were &#8220;baseless and without legal merit.&#8221; ADIC declined to comment.<\/div><div><address><div><div><noscript>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"120\" height=\"120\" alt=\"Chris Prentice\" class=\"wp-image-891\" src=\"https:\/\/reliablemovingcrews.com\/wp-content\/uploads\/2026\/06\/76ba689943c07990ec1fd931b43fb443.avif\"\/><\/figure>\n<\/noscript><\/div><div>Chris Prentice<\/div><\/div><div><ul><li><span><div><svg><title>Email<\/title><\/svg><\/div><\/span><\/li><li><span><div><svg><title>X<\/title><\/svg><\/div><\/span><\/li><li><span><div><svg><title>Linkedin<\/title><\/svg><\/div><\/span><\/li><\/ul><\/div><\/address><address><div><div><noscript>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"120\" height=\"120\" alt=\"Isla Binnie\" class=\"wp-image-1125\" src=\"https:\/\/reliablemovingcrews.com\/wp-content\/uploads\/2026\/06\/0955cdb511b4069e09bb58f24cbd567d.avif\"\/><\/figure>\n<\/noscript><\/div><div>Isla Binnie<\/div><\/div><div><ul><li><span><div><svg><title>Email<\/title><\/svg><\/div><\/span><\/li><li><span><div><svg><title>X<\/title><\/svg><\/div><\/span><\/li><li><span><div><svg><title>Linkedin<\/title><\/svg><\/div><\/span><\/li><\/ul><\/div><\/address><\/div><\/div><p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=2841\">Wall St rebounds with broad gains as oil slides sharply<\/a><\/p><p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=2840\">Trump set to mark nation\u2019s 250th birthday with campaign-style rally<\/a><\/p><p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=2838\">Ships start sailing through Hormuz under UN evacuation scheme, agency says<\/a><\/p>","protected":false},"excerpt":{"rendered":"<p>The U.S. Securities and Exchange Commission&#8217;s enforcement division is probing funds typically used by private equity firms and other money managers to hold \u200bon to assets they either cannot or do not wish to sell, as the agency explores potential issues in private markets, said three people familiar with the matter.<\/p>\n","protected":false},"author":1,"featured_media":2842,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[112,30,78,41],"class_list":["post-2843","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-capital-markets","tag-corporate-counsel","tag-regulatory-oversight","tag-securities-enforcement"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - 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