The US Securities and Exchange Commission (SEC) has highlighted alternatives including private credit as a key examination priority for 2026, with the agency taking a closer look at disclosures and products aimed at retail investors amid recent negative press surrounding the market.
For the first time in several years, the SEC’s Division of Examinations’ list of priorities does not include a standalone section dedicated to advisers to private funds. However, it emphasised several areas relevant to them, including increased scrutiny of private credit funds and other alternative investments. Other areas highlighted by the division for next year include fiduciary duty, standards of conduct and the custody rule.
The US independent agency publishes its examination priorities to provide transparency to registrants and investors regarding the focus areas for 2026, encouraging firms to direct compliance efforts towards areas of potentially “heightened risk”. However, the SEC’s chairman Paul Atkins highlighted that this “should no be a ‘gotcha’ exercise”.
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One of the division’s examinations will focus on products featuring characteristics such as alternative investments, including private credit, and funds with extended investment lock-up periods.
In addition, the SEC will scrutinise complex or tax-advantaged investments, including exchange-traded fund wrappers that invest in illiquid assets such as private debt, as well as products that carry higher associated costs, have complex fee structures or return calculations.
Law firm Paul Hastings noted in a commentary on the regulatory update that, particularly in relation to private funds, the SEC will look at advisers who also manage separately managed accounts, looking for instances of “favouritism” in investment allocations and interfund transfers.
The division’s continued focus on private funds, including credit, follows a series of high-profile bankruptcies, such as those of First Brands and Tricolor, which have cast a negative shadow over the private credit market.
Read more: First Brands: Private credit exposure limited but raises questions over lending standards
The examination programme will also review advisers to private funds that sponsor products sold to retail investors. Paul Hastings commented that it expects “additional focus on those products”.
The SEC’s move comes amid a rise in retail-friendly evergreen funds and after US President Donald Trump signed an executive order in August permitting alternatives, including private credit investments, to be included in 401(k) plans.
The SEC division is also reviewing newly launched private markets funds to assess regulatory awareness across several priority areas, including liquidity, valuation, fees, disclosures and the differential treatment of investors, such as through the use of side letters, Paul Hastings added.
