The Evolving Regulatory Landscape for Private Credit: Key Considerations for Lenders

Private credit is not governed by a single regulatory regime. Depending on the manager, vehicle, investor base, financing structure, and jurisdiction, private credit activity may be subject to overlapping securities, investment company, retirement, insurance, lending, and cross-border requirements. Managers are commonly registered investment advisers subject to the Investment Advisers Act. Business development companies (BDCs) and other registered products are subject to the Investment Company Act, and retirement plan assets implicate the Employee Retirement Income Security Act of 1974 (ERISA). Insurers investing in the asset class are subject to state insurance regulation, certain direct lending activity is subject to state licensing and commercial financing disclosure laws, and non-U.S. structures are subject to their own fund regimes. No single U.S. regulator, however, has comprehensive jurisdiction over private credit as an asset class.

In 2026, several parts of that framework are changing — at different speeds and through different mechanisms. The Financial Stability Board (FSB) estimates the global private credit market at roughly US$1.5 trillion to US$2.0 trillion as of year-end 2024, a range that itself reflects definitional and data limitations.¹ That growth, the expansion of retail and retirement capital into the asset class, elevated repurchase requests at certain semiliquid vehicles, and the insolvencies of certain companies involving alleged fraud, misstated financial information, and multiple pledges of the same collateral — have increased regulatory attention across several channels. This article surveys those developments, distinguishing requirements already in effect from proposals, supervisory initiatives, and litigation, and identifies practical steps relevant to different private credit business models. As used below, “lenders” and “platforms” refer collectively to the managers, advisers, funds, BDCs, and other vehicles through which private credit is originated and held.

The U.S. Federal Landscape

1. The Securities and Exchange Commission

At the SEC’s March 2026 Private Markets Roundtable, Chairman Paul Atkins endorsed what he described as the “responsible retailization” of private markets — broadening access without weakening investor protection.² The staff’s 2026 examination priorities — which inform risk-based examinations but do not themselves impose new requirements — identify valuation practices, fees and expenses, conflicts of interest, and advisers’ duties with respect to products featuring extended lockups and limited liquidity as areas of attention.³ On the rulemaking side, a joint proposal of the SEC and the Commodity Futures Trading Commission (CFTC) would streamline certain Form PF reporting while also seeking comment on whether additional private credit-specific information is warranted, and, under an August 2025 executive order, the SEC has been directed to consider revisions to rules and guidance relating to “accredited investor” and “qualified purchaser” status.⁴

2. Banking Regulators

Federal banking regulators do not supervise private credit funds, but they are gathering more information about banks’ exposures to the sector. The Federal Reserve collects granular detail on large banks’ exposures to nondepository financial institutions (NDFIs), including private credit funds, through its FR Y-14Q reporting, and in April 2026 added special questions on NDFI lending to its Senior Loan Officer Opinion Survey. The Spring 2026 Semiannual Risk Perspective of the Office of the Comptroller of the Currency identifies private credit refinancing risk and growth in bank lending to private credit funds, together with rising concentrations at some banks, as areas warranting monitoring, and the Office of Financial Research has published analysis of methods for measuring counterparty exposures to private credit.⁵ These are supervisory and analytical exercises, not new rules for funds. As a practical matter, however, enhanced supervisory attention may lead some bank counterparties to request more granular information and reporting from private credit firms, including in fund finance and back-leverage arrangements.

3. The Retirement Channel

An August 2025 executive order directed federal agencies to facilitate access to alternative assets, including private credit, in defined contribution plans, and in March 2026 the Department of Labor proposed — but has not adopted — a fiduciary process safe harbor for the selection of designated investment alternatives in 401(k) lineups, including alternatives.⁶ The proposal is framed as neutral among asset classes and centers on the fiduciary’s evaluation of fees, performance, liquidity, valuation, complexity, and available benchmarks. Product design, valuation support, liquidity terms, fee disclosure, and the availability of reliable diligence information may therefore affect whether plan fiduciaries can prudently evaluate and select a vehicle under any final framework.

4. Congress and Treasury

Congressional attention has also increased. In May 2026, Massachusetts Democratic Sen. Elizabeth Warren, as ranking member of the Senate Banking Committee, wrote to the Secretary of the Treasury and the SEC Chairman regarding private credit risks, and the Congressional Research Service has published overviews of the market and of fund redemption restrictions.⁷ Treasury has separately engaged with state insurance regulators on the sector. These activities do not themselves establish requirements, but they may inform future legislative oversight and agency priorities.

5. The Department of Justice

The Department of Justice, and particularly the United States Attorney’s Office for the Southern District of New York (SDNY), has made clear that policing the private credit market is a priority. Jay Clayton — the previous U.S. Attorney for the SDNY, who recently departed to become the Director of National Intelligence — has stated publicly that “the financial regulators and the Department [of Justice]” are looking at private credit markets, in particular at the marks assigned to assets in the space. Although the prosecutions currently pending in the SDNY involve allegations of fraud by borrowers in the pledging of the same assets to multiple lenders and the furnishing of false or fraudulent financial documents, recent public reporting suggests that SDNY is continuing to open probes of lenders as well and examining how private credit assets are being valued and, where necessary, disclosed.⁸

State and Insurance Regulation

Some of the most concrete recent changes have come through the National Association of Insurance Commissioners (NAIC) — a standard-setting organization whose measures take effect through state adoption — reflecting insurers’ growing allocations to private credit, frequently through rated note feeder structures. In a typical rated note feeder, a feeder fund invests in a private credit fund and issues to the insurer a combination of rated notes and a smaller equity tranche. Depending on the rating or designation, the structure, and applicable insurer rules, the rated note component may receive different — and potentially more favorable — capital treatment than a direct equity interest in the underlying fund. Effective January 1, 2026, reforms to the filing-exemption process permit the NAIC Securities Valuation Office (SVO) to flag, and subject to further review through a structured process, a credit rating that it believes does not reasonably reflect investment risk, which may result in a different NAIC designation. Implementation processes continue to be operationalized.⁹ In addition, a Credit Rating Provider Working Group formed in January 2026 has proposed, for comment, a due diligence framework governing reliance on rating agency ratings. State insurance regulators have not suggested that private credit allocations are inappropriate. The focus, rather, is on whether capital and disclosure tools reflect underlying risk. For platforms that rely on insurance capital, these changes bear directly on structuring. Separately, state lending licensing and commercial financing disclosure requirements noted above are existing law in many states, though a comprehensive survey is beyond the scope of this Update.

International Developments

In May 2026, the FSB published a report on vulnerabilities in private credit.¹ The report acknowledges the sector’s benefits — providing tailored financing for midsize companies underserved by public markets and diversification for investors — and observes that measured direct bank exposures appear limited relative to banks’ overall assets and capital while emphasizing that available data remain incomplete. It also identifies vulnerabilities, including data gaps, valuation opacity, liquidity mismatch in certain structures, leverage, concentration, and interconnections among funds, banks, and insurers. The FSB’s stated next steps are analytical — mapping interconnections, harmonizing definitions, facilitating supervisory discussion, and closing data gaps — rather than a regulatory timetable.

In the EU, member states were required to transpose and apply most amendments under the amended Alternative Investment Fund Managers Directive (AIFMD II) by April 16, 2026, introducing an EU-level framework for loan-originating alternative investment funds — risk retention, leverage limits, concentration limits, and enhanced liquidity risk management — subject to national implementation and transitional provisions, including transitional treatment available to certain existing loan-originating funds through 2029.¹⁰ The UK is pursuing its own reform process rather than transposing AIFMD II: The Financial Conduct Authority and HM Treasury are consulting on a revised UK regime for fund managers, and the Bank of England’s systemwide exercise involving private markets remains exploratory, with interim findings expected later in 2026 and a final report in 2027. For global platforms, the near-term result is jurisdiction-by-jurisdiction variation.

Emerging Litigation Trends

Recent putative securities class actions against certain BDCs have alleged misleading statements concerning portfolio credit quality, valuation processes, and distributions. Separate actions under Section 36(b) of the Investment Company Act, brought by fund shareholders on behalf of the funds, have challenged adviser compensation, in some cases linking alleged valuation practices to fee calculations. Litigation has also followed the First Brands collapse, including claims alleging multiple pledges of the same collateral and misstated financial information. These allegations remain contested. The cases nevertheless illustrate that the same public disclosures and contemporaneous governance records may become relevant in both examinations and litigation — and that valuation governance, disclosure consistency, and collateral verification are being tested in more than one forum.

Policy Context

The policy debate reflects competing considerations, many of which the FSB itself acknowledges. Officials and some policymakers point to data gaps, valuation opacity, interconnection with the regulated banking and insurance systems, and the arrival of investors with different liquidity needs and levels of familiarity with private-market products. Industry participants respond that closed-end funding and contractual limits on withdrawal mitigate the run risk associated with deposit funding, that floating-rate assets reduce duration risk (while increasing debt-service pressure on borrowers), and that manager-investor economics are generally aligned — although these features vary substantially across drawdown funds, evergreen and interval structures, and nontraded BDCs. Industry participants also note that private capital has supplied liquidity during periods of dislocation: In the early stages of the Covid-19 pandemic, private credit lenders continued to originate loans and support portfolio companies while syndicated markets were largely closed. Borrowers and sponsors, for their part, value the speed, certainty, and flexibility of private credit and note that requirements that raise lenders’ costs may be priced into credit. At the U.S. federal level, most recent developments have taken the form of proposals, examination priorities, and data collection. The more concrete changes to date have come in the EU and in the insurance context.

Looking Ahead

Several themes emerge from these developments. Data calls, definitional work, and expanded reporting may be the near-term reality, even amid deregulatory initiatives. Retail and retirement channel access is likely to be accompanied by liquidity management, valuation governance, and disclosure expectations. Insurance capital requirements are changing on specific, announced timelines. Supervisory expectations may reach platforms indirectly through bank counterparties. And the international picture will continue to vary by jurisdiction. None of these outcomes is certain, and a future stress event could increase policymakers’ attention considerably — but each is plausible enough on current evidence that preparation is warranted.

How Lenders Can Prepare

Because the developments described above apply unevenly, preparation should be calibrated to the platform’s business model.

For registered advisers and managers generally

Valuation remains the common thread across examination priorities and recent litigation. Methodologies should be documented and applied consistently from period to period, and credit deterioration should be recognized timely. Platforms should also consider, based on materiality and valuation risk, whether independent pricing inputs, third-party valuation assistance, or additional review are appropriate for illiquid and watch-list positions. Back-testing marks against subsequent realization events is a useful means of testing the methodology and documenting governance. Conflicts, allocation, and fee practices warrant the same attention — particularly where a platform manages drawdown funds and perpetual products investing in the same credits — as do data controls that allow the platform to aggregate exposures by counterparty, sector, and financing source and to respond efficiently to investor and regulator information requests.

For BDCs, registered funds, and semiliquid retail products

Rule 2a-5 under the Investment Company Act provides the baseline for valuation processes. Boards and valuation designees cannot outsource their responsibilities, and alignment between the valuation process described in disclosure documents and the process actually followed is now tested in litigation as well as examinations. Repurchase and tender mechanics should be modeled against elevated request scenarios, and liquidity-related disclosures should be accurate and consistent across offering documents, marketing materials, and investor communications.

For insurance-facing structures

Rated note feeders and similar structures should be reviewed against the SVO’s revised processes and the proposed rating agency due diligence framework, including sensitivity analysis of capital treatment if a rating were flagged for review or a different designation assigned. Documentation supporting the rating should be maintained with that possibility in mind.

For bank-financed platforms

Platforms using subscription, net-asset-value–based, or back-leverage facilities may see more granular diligence and information requests from bank counterparties, particularly at renewal. Information undertakings should be negotiated with operational capacity in mind.

For EU and UK platforms

Loan-originating funds should confirm the national implementation and transitional provisions applicable to them under AIFMD II — including transitional treatment available to certain existing funds — and monitor the UK’s separate consultations for divergence relevant to structuring.

Across business models

Recent collateral disputes underscore fundamentals: precise collateral descriptions, verified lien perfection, and diligence on potential competing pledges. Consistency across credit documentation, offering materials, and periodic reporting may reduce both examination and litigation risk.

Conclusion

The current landscape does not point to a single regulatory endpoint for private credit, and nothing in it suggests that the sector is headed toward bank-style regulation. The more immediate task for platforms is to identify which existing or proposed requirements apply to each adviser, fund, investor channel, and financing arrangement — and to assess whether valuation, liquidity, conflicts, data, and collateral-control processes can support those activities as products, distribution channels, and counterparties evolve. The appropriate response will differ by business model: Confirm present obligations, assign responsibility for monitoring pending developments, and test whether existing governance and reporting can scale. Platforms that calibrate their preparation to the developments relevant to their particular businesses will be well positioned under whatever framework ultimately emerges.

Private Credit Perspectives is a monthly series focused on legal and market developments affecting private credit investors.

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¹ Financial Stability Board, Report on Vulnerabilities in Private Credit (May 6, 2026), available at www.fsb.org.

² Paul S. Atkins, Opening Remarks at Private Markets Roundtable (March 4, 2026), available at www.sec.gov.

³ SEC Division of Examinations, Fiscal Year 2026 Examination Priorities.

⁴ SEC and CFTC, joint proposal regarding Form PF reporting (2026); Executive Order, “Democratizing Access to Alternative Assets for 401(k) Investors” (August 2025) (directing, among other things, review of the “accredited investor” definition).

⁵ See Board of Governors of the Federal Reserve System, FR Y-14Q (collecting granular data on bank holding company exposures to nondepository financial institution categories, including private equity, BDCs, and credit funds); Board of Governors of the Federal Reserve System, Senior Loan Officer Opinion Survey on Bank Lending Practices (April 2026) (including new special questions on lending to nondepository financial institutions); Office of the Comptroller of the Currency, Semiannual Risk Perspective (Spring 2026); Office of Financial Research, Measuring Counterparty Exposures to Private Credit, OFR Brief No. 26-02 (March 12, 2026).

⁶ U.S. Department of Labor, Employee Benefits Security Administration, proposed rule (March 30, 2026).

⁷ Letter from Sen. Elizabeth Warren, Ranking Member, U.S. Senate Committee on Banking, Housing, and Urban Affairs, to the Secretary of the Treasury and the Chairman of the SEC (May 13, 2026); Congressional Research Service, “Private Credit: Trends and Policy Issues” (IF12642); Congressional Research Service, “Private Credit Funds Redemption Restrictions: Market Context and Policy Issues” (IN12674).

⁸ See “Private Credit’s Sketchy Marks Get Warning Shot From Top DOJ Cop,” Bloomberg (November 25, 2025); “Private Credit Marks Drawing More Scrutiny From SDNY Prosecutors,” Bloomberg (June 3, 2026).

⁹ NAIC, revisions to the filing-exemption process (effective January 1, 2026); NAIC Credit Rating Provider Working Group, proposed due diligence framework (exposed for comment May 2026).

¹⁰ Directive (EU) 2024/927 (AIFMD II) (member-state transposition and application of most amendments required by April 16, 2026, subject to national implementation and transitional provisions).