The private credit market, a behemoth worth between $1.8 trillion and $3 trillion, now finds itself under the magnifying glass of the Southern District of New York (SDNY). Wall Street’s top cop, Jay Clayton, is on a mission to sniff out potential misconduct in how asset valuations are determined, suspecting practices like “cherry-picking” could be inflating management fees.
Behind the scenes
This isn’t just a small accounting hiccup but a full-blown investigation. BlackRock TCP Capital Corp. (TCPC) is feeling the heat after publicly slashing their net asset value (NAV) by an estimated 19% back in January 2026, taking it from a previously robust $8.71 to between $7.05 and $7.09. The result? A 13% nosedive in their stock price that left investors seeing red and several storming to court with fraud allegations in tow.
The timing isn’t entirely coincidental. This scrutiny comes hot on the heels of a wave of bankruptcies in 2025 that pointed to manipulations in asset valuations. Case in point: Tricolor Holdings was caught red-handed trying to double-dip $2.2 billion in collateral, while First Brands was accused of beefing up invoices to look more appealing. These aren’t isolated incidents either, prompting regulatory heavyweights like the SEC and DOJ to join the chase for truth and accountability in the private credit arena.
