Private Funds Lost Their Own SEC Exam Section. That Cuts Both Ways.

The SEC Deleted the Private Fund Heading, Not the Private Fund Exam

The SEC's Division of Examinations released its Examination Priorities for Fiscal Year 2026 on November 17, 2025, and the document does not contain a dedicated section on investment advisers to private funds. Private fund considerations, including private credit and valuation, are folded into broader thematic review areas instead. The Investment Adviser Association's Private Equity Fund Advisers Committee recently met in New York and spent part of that session on exam priorities, private credit, and valuation.

Here is the part the coverage is missing. A missing heading reads like de-prioritization, and several firms are treating it that way. The opposite reading is the correct one: when private fund issues are distributed across fiduciary duty, valuation, conflicts, and operational resilience modules, a private equity or private credit manager can be pulled into any of them rather than one.

Here is what changed, why the structural edit matters more than the word count, and what your leadership team should decide before your next exam letter arrives.

Why the IAA Committee Is Focused on Private Credit and Valuation

The IAA is not a fringe trade group. Founded in 1937 as the Investment Counsel Association of America, it has more than 600 member firms managing more than $57 trillion in assets. Its Private Equity Fund Advisers Committee meets three times per year by conference call and once per year in person, and exists to work through legal, regulatory, compliance, and operational issues for managers of private equity funds and funds of funds.

When that group puts private credit and valuation at the center of an in-person agenda, it is reporting what its members are seeing in the field.

The substance behind the concern is specific. Commentary on the 2026 priorities indicates that tailored private credit exams may focus on four areas:

• Valuation methodologies for less liquid or bespoke instruments, where there is no observable market price to defend the mark.
• Handling of material nonpublic information when the same firm trades loans and securities of the same issuer.
• Participation in lender groups and ad hoc committees, which puts a manager inside the borrower's capital structure discussions.
• Oversight of third-party financial advisers and consultants engaged in workouts and restructurings.

That list is a map of the private credit business model, drawn by the people who will examine it. See the practitioner summary of the 2026 priorities for private fund advisers for the underlying detail.

Reading the Signal: What Disappears From the Priorities Tells You More Than What Stays

The 2026 document is worth reading as a signal, not a syllabus. Two structural facts carry most of the information.

Crypto assets vanished

Crypto assets are absent from the 2026 Examination Priorities for the first time since 2018. That is a genuine reallocation of attention. Digital asset exposure is no longer the headline risk category in the exam program.

Private funds were redistributed, not removed

Private funds were handled differently. The section vanished; the subject matter did not. This is the distinction most firms are getting wrong, and it changes how you should prepare.

A standalone private fund section functions as a checklist. Examiners work the enumerated topics, and a manager can rehearse them. When valuation of illiquid instruments sits inside a general fiduciary duty and conflicts review that applies to every adviser, the questions arrive without the private fund label attached — and they arrive in exams of managers who did not think of themselves as the target population.

The backdrop matters here. On June 5, 2024, a unanimous three-judge panel of the Fifth Circuit vacated the SEC's Private Fund Adviser Rules in No. 23-60471, holding that the Commission exceeded its statutory authority under Sections 206(4) and 211(h) of the Investment Advisers Act of 1940. The SEC did not appeal. With the prescriptive rulebook gone, the examination program and Section 206 fiduciary duty are the instruments the staff still holds. Expect them to be used.

What Your Leadership Team Should Decide This Quarter

These are decisions for the general partner, the CFO, and the chief compliance officer together, not a compliance-department task.

First, stress-test the valuation file, not the valuation policy. A written policy is easy. What examiners test is whether the marks on bespoke or illiquid credit instruments trace to documented inputs, a consistent methodology applied period over period, and a committee record that shows disagreement being resolved rather than rubber-stamped. Pull three recent marks and ask whether an outsider could reconstruct them from the file alone.

Second, map where loan-side information touches securities-side trading. If your firm participates in lender groups or ad hoc committees, someone in the room is receiving material nonpublic information about an issuer whose securities another part of the firm may trade. The control is an information barrier and a restricted list that actually functions, with logs that prove it.

Third, treat third-party advisers as an oversight obligation you own. Restructuring advisers, consultants, and valuation providers are extensions of your process. Diligence, fee arrangements, and conflict disclosures should be documented before an examiner asks who selected them and why.

Fourth, confirm your Regulation S-P remediation is finished. The SEC adopted amendments to Regulation S-P on May 16, 2024 (Release No. IA-6604), effective August 2, 2024. Advisers with $1.5 billion or more in assets under management were required to comply by December 3, 2025, and all other registered advisers by June 3, 2026. Both deadlines have passed. An incident response program and customer notification procedures are now baseline exam items, and their absence is a finding rather than an observation.

If your firm has not run a mock exam against these areas, the exam letter will be the first test. Working through this with SEC exam counsel before a document request arrives is materially cheaper than doing it after.

Key Takeaways

• The missing private fund section is a broadening, not a reprieve. The 2026 Examination Priorities, released November 17, 2025, fold private credit and valuation into thematic reviews that reach every registered adviser.
• Private credit exams have four named pressure points. Valuation of bespoke instruments, MNPI handling across loans and securities, lender group and ad hoc committee participation, and oversight of third-party advisers.
• Crypto assets dropped out of the priorities for the first time since 2018. Exam attention has been reallocated, and private fund valuation is one of the places it went.
• The Fifth Circuit's June 5, 2024 vacatur raised the stakes for exams. With the Private Fund Adviser Rules struck down in No. 23-60471, Section 206 fiduciary duty and the exam program are the remaining levers.
• Both Regulation S-P compliance deadlines have passed. December 3, 2025 for larger advisers and June 3, 2026 for everyone else — a missing incident response program is now a straightforward deficiency.