Private Equity Law Report

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    Nov. 12, 2026

SEC Retailization Proposals: Performance‑Based Compensation for Regulated Funds (Part One of Two)

On September 30, 2026, the SEC issued a package of proposals for expanding “responsible retailization of private markets.” Most notable among them are proposed amendments to permit registered funds, and certain private funds, to charge performance fees (Performance Fee Proposal), comments on which are due on December 7, 2026. By making it more lucrative for private fund managers to offer certain registered funds, the hope is that a flood of new funds will be launched that will subsequently create more private market investment options for retail investors. This first article in a two-part series details the relevant provisions of the Performance Fee Proposal, including which are most impactful, downstream effects on the private funds industry and what fund managers should expect going forward. The second article will analyze the SEC’s five notices on new exam- and credential-based ways for individuals to qualify as “accredited investors”; its proposal to reform liquidity requirements for interval funds and enable closed-end registered funds to issue multiple share classes; and some of the high-level takeaways about where the proposals fit in the SEC’s broader retailization efforts.  See “SEC Reg Flex Agenda Hints at Atkins’ Deregulatory Rulemaking Priorities” (Aug. 20, 2026).

SEC Joint Statement on Private Credit Emphasizes Best Practices on Valuations and Disclosures

The SEC’s Chief Accountant Kurt Hohl and its Division of Investment Management Director Brian Daly jointly issued a “Statement on Fair Value Measurement and Disclosure Considerations for Private Assets” (Valuation Statement) on September 28, 2026, clarifying the Commission’s stance toward measuring fair value and attendant disclosure considerations for private credit assets. Framed as a “reminder” to fund managers, the Valuation Statement addresses common irregularities and conflicts of interest in how fund managers value private credit assets so as to both protect investors’ interests and ensure the transparent functioning of the financial markets. In light of increased private litigation and regulatory scrutiny surrounding private credit assets generally, and valuations specifically, the Valuation Statement offers fund managers an opportunity to reassess and benchmark their compliance practices against SEC expectations. This article summarizes the Valuation Statement; considers the market factors that prompted the SEC to issue the guidance; assesses where the statement fits in broader SEC efforts, including as to retailization; and offers practical takeaways for fund managers of private credit assets. See “Anticipating and Mitigating Threats Posed by the Latest Surge in Private Credit Litigation” (Oct. 15, 2026).

From Guidance to Rule: What CIMA’s New AML and Sanctions Rules Mean for PE Funds

On July 20, 2026, the Cayman Islands Monetary Authority (CIMA) published the Rule on Effective Compliance Programme for the Prevention and Detection of Money Laundering, Terrorist Financing and Proliferation Financing for Financial Services Providers (AML Rule) and the Rule on Compliance with Financial Sanctions and Targeted Financial Sanctions (together with the AML Rule, Rules). The Rules went into effect on September 18, 2026. At an industry briefing on September 30, 2026, CIMA announced a program of desk-based anti-money laundering reviews of regulated entities, including investment funds. For the most part, the Rules restate obligations that should already be familiar to CIMA-registered and licensed financial services providers, including all registered investment funds; managers; advisers; and other registered or licensed entities. They also introduce certain expanded requirements, however, most notably as to independent audits and training, which will require some practical adjustments by applicable investment advisers. In a guest article, Walkers partner Lucy Frew details the relevant provisions of the Rules and offers guidance on how PE sponsors can comply. For more on Cayman Islands, see “Private Funds Act’s Role in Enhancing and Modernizing the Cayman Islands’ Private Funds Industry” (Jun. 8, 2021); and “Practical Impact of the Cayman Islands Private Funds Regime on Closed‑End Fund Managers” (Apr. 7, 2020).

Notable Features and Distinctions of the Private Credit Secondaries Market

Although the market for GP‑led secondary transactions involving PE assets has rapidly matured over the last several years, it is at a much more formative stage for private credit assets. Unique traits and features of private credit assets as compared to PE assets flow through to how GP‑led secondary transactions are structured, financed, negotiated and executed. As investor and manager interest in private credit secondaries continues to grow, however, the market will continue to coalesce into agreed terms. A program hosted by the Alternative Investment Management Association (AIMA) examined the current market for private credit secondaries, including key drivers; conflicts management and the critical role of LP advisory committees; deal structures and economics; and a step-by-step look at the typical process of launching and closing a private credit secondaries deal. Moderated by Michele Noyes, head of Americas at AIMA, the program featured Kirkland & Ellis partners Susan Burkhardt, Andrew J. Gershon and Jake Heyka; and Chae Park, senior vice president at Jefferies. This article distills the key takeaways from the program, though specific attribution of quotes is limited given that the program operated under Chatham House Rules. See “Morgan Lewis Survey Details Growing Consensus on Continuation Vehicle Fees, Expenses and Other Terms” (Jun. 25, 2026).

Former SEC Officials Unpack the 2026 Enforcement Landscape

Leadership transitions at regulatory agencies are inevitable following a change in presidential administration. Through Paul S. Atkins’ tenure as SEC chairman, however, such turnovers have brought about wholesale reversals of enforcement approaches, policies and focus areas. The result is a Commission that operates quite differently than under previous administrations, with enforcement priorities that have evolved with the new challenges facing the private markets. Those topics were addressed at the White Collar Crime Conference presented by the New York City Bar Association by blue-ribbon panels of former enforcement directors from the SEC Division of Enforcement and the CFTC Division of Enforcement. Among the discussion topics relevant to closed-end private fund managers were the impact of staffing cuts, the SEC’s “back to basics” enforcement priorities, attempts to stop so-called “regulation by enforcement,” the impact of two 2024 U.S. Supreme Court decisions and revisions to the SEC enforcement manual. This article synthesizes their observations on those relevant topics. See “SEC Enforcement FY2026 in Review: Comprehensive Statistical Analysis Highlights Trends and Focus Areas” (Oct. 29, 2026).

McDermott Will & Schulte Welcomes Leslie Hung in New York

Leslie W. Hung has joined McDermott Will & Schulte as a partner in its investment management practice in New York. She focuses on the structuring of private investment funds. For insights from McDermott Will & Schulte, see our two-part series on LP portfolio financing facilities: “Key Terms of the Emergent Liquidity Option for Fund Investors” (Sep. 3, 2026); and “Complexities of Loan‑to‑Value Ratios and Other Lender Protections” (Sep. 17, 2026).

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