Manhattan's top federal prosecutor said on Wednesday he and his staff are asking questions in the private asset marketplace about valuations, as concerns rise about opacity in those processes in private credit and private equity.
Regarding "marks and transparency of marks, we can do a better job," U.S. Attorney for the Southern District of New York Jay Clayton told the Bloomberg Global Credit Forum.
Scrutiny has intensified on the valuations asset managers place on securities that rarely trade, partly pushed by increasing efforts among investment firms and some governments to channel more retail investor money into private assets.
Clayton said that in a market where multiple participants have the same asset marked at different levels, it was important to ask questions, "particularly if they're making fees."
"We can eliminate the question of whether people are marking something in book A at 100 and book B at 90," he added. "I'm asking my people to look at that question across the marketplace."
Clayton said he got "great support from the large financial institutions" and has never faced a situation where he asked one of them for information, "said this is really important to me" and not been provided it.
Leaders of those institutions "don't want shenanigans," he said.
