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Federal authorities are taking a closer look at the valuations used by private credit funds. The U.S. Department of Justice has begun investigating possible irregularities in how these funds report portfolio values, according to a post from investor Jeffrey Gundlach. Gundlach suggests that following the probe, firms in the sector could report downward ''adjustments'' to their entries. The comment refers to ongoing concerns about transparency and risk in private credit, a market segment that has rapidly expanded in recent years. The investigation could prompt industry-wide changes to valuation methodologies.
Gundlach previously highlighted a 10.6 percent contrarian private credit strategy as debate around the sector intensified in the U.S. He is also known for commentary on macro trends and risks outside of credit markets. This week’s remarks come as investors reassess private credit fund valuations under new regulatory scrutiny.