The staff of the Securities and Exchange Commission, including the Office of the Chief Accountant and the Division of Investment Management (the “Staff”), recently issued a Statement on Fair Value Measurement and Disclosure Considerations for Private Assets (the “Statement”).  The Statement highlights considerations for applying Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement, to private assets, particularly private credit investments and emphasizes the importance of focused and transparent disclosures.

The Statement comes as investments in private credit continue to grow.  The Staff notes that registered fund portfolios holding private credit increased by approximately 60% to nearly $100 billion between December 2020 and December 2025.  This growth also presents unique valuation challenges.  Private credit investments are often illiquid loans that are privately negotiated and do not trade in active secondary markets, making fair value difficult to determine.  Under the fair value hierarchy in ASC Topic 820, private credit investments generally fall within Level 3 when significant inputs used to determine fair value are unobservable.  The Statement provides reminders regarding valuation and disclosure considerations.

The Staff emphasizes that the availability of information is an important consideration in determining fair value and that the analysis must be conducted from the perspective of a market participant.  Management remains responsible for determining fair value even when timely information is not available.  In the private credit context, information provided by borrowers to lenders may vary significantly in quantity, quality and frequency.  Management may begin its analysis with information obtained through its relationship with the borrower but must consider whether that information differs from reasonably available information that a market participant would use in pricing the investment.  Such information may include prevailing credit spreads, liquidity conditions and the compensation market participants would require for investment risk.

The Staff also highlights the importance of calibration under ASC Topic 820.  The initial transaction price generally serves as an important reference point for determining fair value.  If a valuation model does not produce a value consistent with the transaction price at inception, management should evaluate the reasons for the difference and make appropriate adjustments.  Subsequent changes in fair value should reflect changes in market participant assumptions and other relevant market conditions.

The Statement also emphasizes the importance of clear and specific disclosures for Level 3 fair value measurements.  ASC Topic 820 requires disclosure of valuation techniques, significant inputs and how changes in those inputs could affect the fair value measurement.  For private credit investments, the Staff notes that disclosures should provide investors with information that may not be apparent from high-level portfolio statistics.  For example, disclosures regarding asset modifications and restructurings may be material, as may information concerning non-accrual and non-performing investments.  The Staff also highlights the importance of clear disclosure regarding payment-in-kind interest.

The Staff further addresses the use of net asset value (“NAV”) as a practical expedient under U.S. generally accepted accounting principles.  In certain circumstances, ASC Topic 820 permits management to estimate the fair value of an investment based on the NAV reported by the investee.  The Staff cautions that use of the NAV practical expedient may result in a measurement that differs from the fair value of the investment on the measurement date.  Because the practical expedient is optional, management should evaluate its applicability on an investment-by-investment basis.

The Statement also highlights considerations for auditors evaluating fair value estimates.  The Staff encourages auditors to apply professional skepticism when evaluating evidence supporting fair value measurements and to perform robust risk assessments that take into account external market factors.  Auditors should also consider whether the use of the NAV practical expedient was appropriate and whether the financial statements and other evidence supporting valuation adjustments are reliable.

The Statement serves as a reminder of the importance of robust valuation procedures and meaningful disclosures.  Applying ASC Topic 820 requires management to consider available information from a market participant’s perspective, even when information about an underlying private investment is limited or delayed.  Focused disclosures regarding valuation methodologies, significant inputs, and developments affecting portfolio investments can provide investors with greater insight into the risks and uncertainties associated with private assets.

For the full statement, see here.

On September 25, 2026, the Staff of the Division of Corporation Finance (the “Division”) of the Securities and Exchange Commission (the “SEC”) published a set of responses to frequently asked questions (the “FAQs”) regarding the application of the federal securities laws to certain crypto assets and certain transactions involving crypto assets. The Division slightly updated the FAQs on September 28.

The FAQs build on the SEC’s March 17, 2026 interpretive release (the “Interpretive Release”), which set forth the SEC’s framework for classifying crypto assets and applying the definition of “security” to digital asset transactions.  The FAQs are organized into two groups, corresponding to Sections III and IV of the Interpretive Release.

Group 1: Classification of Crypto Assets

The first group addresses the SEC’s classification framework, including the following key guidance:

  • The definitions of “functional” and “decentralized” in the Interpretive Release are relevant to how the SEC classifies crypto assets, but are not the standard by which the SEC determines whether an issuer has fulfilled its representations or promises.  Each issuer determines the thresholds that must be met to achieve functionality and/or decentralization for purposes of its own representations or promises.
  • Staking Receipt Tokens that are receipts for a digital commodity not subject to an investment contract are classified as “digital tools” because they serve the practical function of evidencing the holder’s ownership of the underlying digital commodity.  However, a Staking Receipt Token may also be classified as a “digital commodity” if it is issued by a protocol-based Liquid Staking Provider, where the token is intrinsically linked to and derives its value from the programmatic operation of a functional crypto system.
  • A “receipt” is distinguished from other financial instruments in that it does not transfer ownership or control of the deposited asset to the receipt issuer, and the issuer cannot transfer, lend, pledge, rehypothecate, or otherwise use the deposited asset for any reason or subject it to claims by third parties.

Group 2: Crypto Assets Subject to an Investment Contract

The second group of FAQs provides guidance on when crypto assets are subject to an investment contract under the Howey test, including the following notable clarifications:

  • Promoting a crypto system’s current utility and capabilities likely would not, without more, constitute representations or promises to engage in essential managerial efforts.  Similarly, promoting a crypto system’s potential utility with indefinite aspirational statements likely would not constitute such representations or promises if such promotional activities contain nothing promoting the potential for profit.
  • Where another party assumes the issuer’s representations or promises to undertake essential managerial efforts, the non-security crypto asset does not separate from and cease to be subject to the associated investment contract.
  • Once a crypto system is functional, services to secure, maintain, improve, or enhance such a system or its functionality, or to facilitate network effects, would not involve essential managerial efforts.
  • Once a functional crypto system has no central party, statements made by the issuer relating to the functional crypto system likely would not create a new investment contract because neither the issuer nor any other person has control of the crypto system that would allow them to affect its failure or success.
  • Where a crypto system is functional and has no central party, an issuer’s announcement of a non-security crypto asset buyback program would not constitute a representation or promise to undertake essential managerial efforts.  However, where a crypto system is not functional, such an announcement could constitute such a representation if the issuer presents the buyback as generating yield or a return for token holders.
  • A trading platform that offers a secondary market for a crypto asset would only be considered a “promoter” if it met the “promoter” definition in Securities Act Rule 405.

The FAQs represent the latest in a series of actions by the SEC and its Staff to provide regulatory clarity for the digital asset markets.  Access the FAQs: Division of Corporation Finance FAQs on Crypto Assets.  Access the referenced Interpretive Release: Interpretive Release.

Business development companies (“BDCs”) continue to be an important source of capital for private equity-owned, small- and middle-market companies and an attractive investment vehicle for investors seeking exposure to private credit. As the BDC market has grown, sponsors and investors have increasingly focused on alternative BDC structures, capital raising, leverage, advisory arrangements and other key features of the BDC market.  The increasing institutionalization of the BDC market is reflected in the growing use of joint ventures with institutional investors and the continued development of co-investment arrangements.

The regulatory landscape for BDCs also continues to evolve.  The SEC’s proposed “Enhancing Retail Exposure to Private Markets” rulemaking is likely to further expand retail access to private market investments, while the SEC’s 2026 Registered Offering Reform proposal is likely to provide BDCs with greater flexibility to access the capital markets.  These developments, together with the SEC’s continued evolution of its co-investment framework, could further affect the ways in which BDC sponsors raise, deploy and retain capital.

As the BDC market continues to mature, sponsors increasingly are evaluating existing public, private and non-traded BDC structures based on investor base, distribution channels, portfolio strategy and capital raising objectives.  At the same time, portfolio quality and liquidity remain important considerations.

Access our updated BDC Facts & Stats, which provides a compendium of information regarding BDCs, including BDC assets under management, the terms of advisory agreements, private and non-traded BDC information and more. A PDF for download is available here.

We hope you find our updated BDC Facts & Stats helpful.

This week, the Staff of the Division of Corporation Finance of the Securities and Exchange Commission granted our no-action letter modernizing and expanding the framework established with the issuance of the 1996 Morgan Stanley no-action letter (“MS Letter”). This no-action letter relief confirms the application of the abbreviated disclosure approach described in the MS Letter for the offer of debt securities registered under the Securities Act of 1933, as amended, referencing the performance of certain underlying securities to registered debt securities referencing the performance of a broader selection of underlying equity assets (such debt securities, “Structured Notes”).

Continue reading

On September 26, the Securities and Exchange Commission’s Division of Corporation Finance continued its ongoing efforts to update and revise the Staff guidance in the form of Corporation Finance Interpretations, or CFIs.  The updates address various topics, ranging from Securities Act and Exchange Act rules to interactive data; all changes were technical “clean-up” revisions to remove or update dated guidance, rather than new substantive guidance.

Securities Act Forms
Current Public Information: Question 131.06Updated to correct references to sections of Exchange Act Rule 15c2-11.
Limitation on Amount Sold: Question 133.02Updated references to OTC Bulletin Board to current market names, Global OTC, OTC Link LLC, or OTC Link NQB.
Manner of Sale: Question 134.02Updated references from Exchange Act Rule 11Ac1-4 to Regulation NMS Rule 604.
Notice of Proposed Sale: Question 136.05Removed requirement that Form 144 be submitted to “principal exchange on which the securities are listed.”
Requirements as to Proper Form: Question 198.08 Delayed or Continuous Offering and Sale of Securities: Question 212.22 Consents Required in Special Cases: Question 233.07 Computation of Fees: Question 240.14: Requirements as to Proper Form: Question 598.02        Withdrawn; dated guidance no longer relevant.
Securities Act Forms
F-Series Forms Generally: Revised Question 102.02 Form F-9: Question 108.01 Form F-9: Revised Question 108.02 Form F-10:  Revised Question 109.07Updated to remove references to Form F-9 and/or withdraw Form F-9-specific guidance.
General Instructions I.B.1 to I.B.6 — Transaction Requirements: Questions 216.15-216.18Withdrawn; dated guidance no longer relevant.
Exchange Act Rules
Manipulative and Deceptive Devices and Contrivances: Rule 10b5-1: Question 120.26 Requirements Under Section 10D: Rule 10D-1 Listing standards relating to recovery of erroneously awarded compensation: Question 121H.01 Rule 12b-25: Questions 135.12 and 135.13Withdrawn; dated guidance no longer relevant.
Exchange Act Forms
Form 10-K: Question 104.18 Form 10-K: Question 104.19 Form 40-F: Question 112.02 Form 40-F: Question 112.04 Form 20-F: Question 110.09Withdrawn; dated guidance no longer relevant.  
Interactive Data
Inline XBRL: Question 101.08 Inline XBRL: Question 101.09 Exchange Act Forms: Question 105.07 Regulation S-K: Question 146.14 Regulation S-T: Question 130.03 Regulation S-T: Question 130.09 Rule 406T: Question 131.01Withdrawn; dated guidance no longer relevant.  

Find the complete list of updated CFIs here.

On September 14, 2026, the staff of the US Securities and Exchange Commission’s (“SEC” or “Commission”) Division of Examinations (the “Division”) issued a Risk Alert (the “Risk Alert”) setting out their examination observations of SEC-registered investment advisers’ (“RIAs”) annual compliance reviews, as required by Rule 206(4)-7 (the “Compliance Rule”) under the Investment Advisers Act of 1940 (the “Advisers Act”). The Compliance Rule requires RIAs to, among other things, adopt and implement written compliance policies and procedures (the “Compliance Program”), and review the Compliance Program annually for effectiveness as further described below. The staff’s observations address the timeliness and completeness of those reviews, the consistency of the reviews with the RIAs’ written procedures, whether the reviews evaluated if the RIA’s current Compliance Programs continue to align with firm business practices and risks, proper retention of any documentation used in the reviews for books and records purposes, and the resolution of compliance matters identified during the reviews. The Risk Alert provides a useful indication of the particular areas examiners are likely to probe and underlines the SEC’s stated 2026 exam priority of focusing on the effectiveness of RIAs’ Compliance Programs.

Continue reading this Legal Update.

On September 22, 2026, the Commodity Futures Trading Commission (“CFTC”), through its Division of Market Oversight (“DMO”), issued a staff advisory (the “Staff Advisory”) addressing the listing and trading of event contracts that settle based on whether an individual will say or “mention” certain words, attend or appear at an event, or otherwise interact with another person.  These contracts are referred to collectively as “mention markets.”  Although the Staff Advisory is informational only and does not create new obligations or supersede existing rules, it signals DMO’s view that mention markets are presumed to be readily susceptible to manipulation.

Most event contracts currently listed on designated contract markets (“DCMs”) settle on externally verifiable outcomes such as economic data releases or election results.  By contrast, mention markets turn on the specific conduct of a named person.  DMO identifies several features that create heightened manipulation risks, including the relative ease with which the settlement condition can be caused, prevented, or influenced for personal gain; the possession of material nonpublic information by individuals close to the outcome; and settlement based on conduct in informal or private settings lacking independent verification and substantial public scrutiny.  DMO identifies four factors as particularly relevant to whether a mention market contract satisfies Core Principle 3 under the Commodity Exchange Act and may be listed on a DCM:

  • Independent obligations constraining the controlling individual.  Whether the person whose conduct determines settlement is subject to legal, professional, fiduciary, or organizational obligations that meaningfully deter manipulation.
  • Susceptibility to external pressure.  Whether the outcome can be manipulated through social engineering, inducements, or public pressure campaigns directed at the controlling individual or someone who can influence that person.
  • Independent verification and substantial public scrutiny.  Whether actions that determine settlement are subject to transparent, independent verification and contemporaneous public scrutiny, including an assessment of the materiality of the relevant words or actions in context.
  • Robustness of prophylactic trading rules, surveillance, and controls.  Whether the DCM has implemented measures such as restricted lists, position limits, heightened surveillance around event windows, and monitoring for unusual trading patterns that are reasonably designed to detect and deter manipulation and the misappropriation of nonpublic information.

The Staff Advisory does not categorically prohibit mention markets, and DMO acknowledges that, in limited circumstances, a well-designed contract coupled with robust DCM controls may rebut the presumption that mention markets are readily susceptible to manipulation. DCMs are strongly encouraged to engage with DMO staff early in the design process and to provide thorough, well-supported filings with the CFTC that detail the prophylactic measures in place.  The Staff Advisory is the latest in a series of CFTC actions shaping the prediction market, as discussed in our prior post from June 2026 regarding proposed rulemaking on event contracts and prediction markets.  Read the full Staff Advisory here.

The Securities and Exchange Commission (“SEC”) announced an open meeting to be held on September 30, 2026.  The SEC will consider several matters relating to investment advisers, closed-end funds and business development companies and accredited investors.

The SEC will first consider whether to propose amendments to the rule under the Investment Advisers Act of 1940 that provides an exemption from the statutory prohibition on registered investment advisers receiving compensation based on a share of capital gains in, or capital appreciation of, an advisory client’s account.  The proposed amendments would also include enhanced disclosure requirements relating to performance-based compensation arrangements.

The SEC will also consider whether to propose amendments to the Investment Company Act of 1940 rule that permits regulated closed-end funds to make repurchase offers to shareholders at net asset value at periodic intervals.  The proposed amendments are also expected to expand the ability of regulated closed-end funds and business development companies to issue multiple share classes.

Finally, the SEC will consider whether to designate certain certifications, designations or credentials as qualifying for accredited investor status.

The meeting will be held on September 30 at 10:00 a.m. ET and will be open to the public and webcast on the SEC’s website.  The SEC’s agenda is available here.

On September 21, the Treasury Department and the IRS issued Notice 2026-61, further delaying the full implementation of the withholding rules on dividend equivalent payments. The Notice extends the phase-in of regulations under Section 871(m) of the Code and related provisions until 2029.

We examine the guidance in the Notice and its implications in this Legal Update.

On September 17, 2026, the Securities and Exchange Commission (the “SEC”) issued an order (Release No. 34-106402; File No. 4-927) granting five-year, temporary exemptive relief allowing (1) qualifying tokenized securities venues that provide innovative automated market makers (“AMMs”) and liquidity pools (together referred to as “AMM Liquidity Pools”) to facilitate trading of National Market System (“NMS”) stocks onchain an exemption from the definition of “exchange” under Section 3(a)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (2) qualifying liquidity providers in an AMM Liquidity Pool that supply liquidity in the form of tokenized NMS stocks an exemption from the definition of “dealer” under Section 3(a)(5) of the Exchange Act.

These exemptions, discussed in detail below, are effective from September 17, 2026 through September 17, 2031, subject to modification as the SEC may determine necessary or appropriate in the public interest and to protect investors.

Continue reading this Legal Update.