The SEC’s Warning Shot on NAV
Updated: 8 hours ago
I read the SEC’s September 28 statement on private-asset valuation as a warning shot.
This was not a general discussion of private markets. The SEC’s Chief Accountant and Director of the Division of Investment Management focused directly on how fair value is being determined under ASC 820, particularly for private credit. They described the statement as a “critical reminder” of the need to maintain rigor in how private assets are valued and how those valuations are disclosed to investors.
Prepared by Mark Goldberg | September 30, 2026
Mark M. Goldberg, Alternative Investments Market Intelligence, 30 September 2026, “The SEC’s Warning Shot on NAV”, https://www.altsmi.com/post/the-sec-s-warning-shot-on-nav |
Their message is difficult to miss.
Borrower performance alone is not enough. Management is required to consider the broader market environment and supplement its own information when it differs from reasonably available market-participant information. Credit spreads matter. Liquidity conditions matter. The compensation a market participant would demand for bearing the risks matters. Comparable transactions, public-market equivalents, secondary-market indications and relevant credit indices matter.
The issue is not ASC 820. The issue is whether firms are applying it as the market-based valuation standard it is intended to be.
That question has become much more important because NAV is being asked to do something it historically did not do. It has become a transaction price.
I have returned to this issue in several recent research notes. In “Know Thyself, What Apollo Is Fixing,” I wrote:
“When NAV was principally a reporting number, valuation was primarily an accounting issue. Once investors and managers began transacting economically against NAV, valuation became a governance issue.”
And in “Liquidity for Me, Not for Thee,” I made the related point:
“NAV is not calculated. It is determined.”
Those observations were addressing the same underlying issue from different directions: who determines NAV, what market evidence is incorporated, and what happens when that determination becomes the price at which investors transact.
The comparison between traded and non-traded BDCs makes the issue particularly difficult to ignore. Traded BDCs largely invest in the same kinds of private-credit assets and apply the same ASC 820 accounting framework. In some instances, the very same loans appear in both traded and non-traded BDCs. In a traded BDC, NAV is principally a reporting number. The market determines the share price. In an NT-BDC, NAV is the transaction price.
Publicly traded BDCs currently trade, on average, at approximately 76% of their reported NAV. Some have significant overlap with the holdings of their non-traded counterparts. The discount does not prove that stated NAV is wrong. Public-market prices reflect other considerations as well.
But it most certainly calls it into question and the comparison is troubling.
Where a market price exists, investors are collectively placing a materially different value on many of these vehicles than the reported accounting NAV. Where no market price exists, investors transact at the accounting NAV itself.
That makes the SEC statement particularly important. The staff says valuation techniques should remain consistent with current market conditions and specifically points to comparable transactions, public-market equivalents, secondary-market indications and relevant credit indices as evidence that should be considered.
If rates move, spreads move, comparable transactions move and public-market evidence moves while reported NAV barely moves, is the NAV actually delivering the market-based fair value ASC 820 is supposed to produce?
The last comparable fair-value statement I can find from the SEC’s Office of the Chief Accountant, issued jointly with FASB staff, came almost exactly 18 years ago, on September 30, 2008. It pushed in the opposite direction, giving companies room to look past distressed market prices. What followed was fast. Within days, Congress ordered the SEC to study mark-to-market accounting. Within about six months, and three weeks after a contentious House hearing, FASB adopted new fair value guidance.
What happened after the 2008 statement
October 3, 2008: The Emergency Economic Stabilization Act required the SEC to study mark-to-market accounting within 90 days.
October 10, 2008: FASB issued Staff Position FAS 157-3, which formalized the September guidance.
December 30, 2008: The SEC delivered its report to Congress, recommending that fair value accounting be improved, not suspended.
March 12, 2009: The FASB chairman testified before a contentious House Financial Services subcommittee hearing.
April 2, 2009: Three weeks later, FASB voted on FSP FAS 157-4 and two related staff positions, adding guidance on inactive markets and distressed transactions. They took effect for periods ending after June 15, 2009, with early adoption allowed.
This time, the staff is pushing in the opposite direction. In 2008, the concern was that distressed secondary-market transactions could overwhelm fair-value judgments. Today, the concern is that managers may not be giving enough weight to market evidence.
Market participants should get ready for more scrutiny. History suggests it’s coming soon.
Mark Goldberg is the founder of Alternative Investments Market Intelligence (AltsMI.com). He has served as chief executive officer of investment management and broker-dealer firms and received the Institute for Portfolio Alternatives’ Lifetime Achievement Award for his contributions to the wealth management industry. Through AltsMI.com, Mark publishes the Alts Leaders Survey and research on private-market adoption in the wealth channel. His commentary and published research are widely read, and he is a featured speaker at industry events.
Mark M. Goldberg, Alternative Investments Market Intelligence, 30 September 2026, “The SEC’s Warning Shot on NAV”, https://www.altsmi.com/post/the-sec-s-warning-shot-on-nav |
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