SIFMA’s Private Markets Valuation Roundtable, SEC Commissioner Mark T. Uyeda, Washington D.C., Sept. 4, 2025

Good morning, and thank you for convening this roundtable on private market valuation. My remarks reflect my views as an individual Commissioner and not necessarily the views of the full Commission or my fellow Commissioners.

Vibrant Private Capital Markets Promote Economic Growth

The private markets provide critical sources of capital to businesses and help further job creation and innovation. Whether in the form of equity or debt offerings, private markets have grown significantly over the past few decades. Indeed, there was $30.9 trillion managed by private funds alone in the fourth quarter of 2024,[1] a figure that excludes direct investments in privately held companies.

To those who argue that the growth of private markets has negatively impacted public markets, I note that economic growth and the capital markets is not a zero-sum game. Public markets benefit from vibrant private capital markets and vice versa. Private markets operate in an environment with more regulatory flexibility and freedom to contract, while public markets provide market participants with enhanced liquidity and access to retail capital that is unavailable elsewhere. From an issuer’s perspective, capital is not fungible, insofar as each pool of capital comes with its own benefits and constraints. Promoting capital formation in both markets enhances the overall economic environment, particularly as public markets provide exit and liquidity opportunities for private companies.[2]

As the authors of one paper, which was presented at the Commission’s 2025 Conference on Financial Market Regulation, note:

Public markets also piggyback on private markets in various ways. For example, private markets incubate companies initially unsuited for public markets. At a more mature stage, such companies can be fed into public markets, ensuring these markets’ continuity and depth by providing additional opportunities for diversification. Public markets also operate more efficiently in the shadow of private markets. A realistic threat of private equity acquisitions, for instance, the presence of highly capitalized buy-out funds, invigorates the market for corporate control and thus incentivizes corporate management to increase value.[3]

As such, it is a far more complex story than simply stating there is too much private capital and too few public companies.

Private Market Disclosure and Valuation

Although the private markets may not be subject to the many prescriptive measures applicable to public companies, they remain subject to key provisions of the federal securities laws: namely, the antifraud provisions, including the prohibitions against false and misleading statements. Importantly, materially accurate private market valuations and disclosures can result in lower costs of capital. This remains equally true whether the investment involves an operating company or a private fund. In 2025, the SEC’s Division of Examinations focused on the accuracy of calculations and allocations of private fund fees and expenses.[4] The priorities included topics that may impact the accuracy of fee calculations such as valuation of illiquid assets and the adequacy of disclosures.

Other issues also implicate the SEC rulebook. Closed-end funds (CEF), like all registered investment companies, are required to strike a net asset value (NAV) on a regular basis, even when their portfolios include hard-to-value or illiquid assets such as level 3 securities. That valuation process is governed by Section 2(a)(41) of the Investment Company Act of 1940[5] and Rule 2a-5 thereunder,[6] also known as the SEC’s “Fair Value Rule,” which was adopted in 2020.

Pursuant to Section 2(a)(41), the fund’s board is responsible, in good faith, for determining the fair value of a security. While boards can determine fair value themselves, Rule 2a-5 allows the board to appoint a “valuation designee”—often the investment adviser—to handle the day-to-day work. That designee may also use an independent valuation firm to help value level 3 assets. These third-party valuations can be performed monthly, quarterly, or even annually, depending on the asset type, cost, and materiality.[7] Rule 2a-5 emphasizes the need for a strong, risk-based process that includes oversight, testing, and documentation.

Accounting Standards Codification Topic 820[8] also applies to such valuation. For CEFs—which don’t face daily redemptions—there is more flexibility to invest in less-liquid assets. However, such circumstances can mean that valuation practices need to be sufficiently transparent and defensible.

Most CEFs calculate NAV daily, though some do it weekly or less frequently. While their shares trade on exchanges—often at a premium or discount to NAV—NAV remains a key reference point for investors, boards, and regulators, especially with regard to activist investor pressure or a potential liquidity event such as a tender offer or conversion.[9]

President Trump’s Path Forward on Alternative Investments

Valuation will also play a role as regulators move forward to implement President Trump’s executive order on alternative investments in 401(k) plans.[10] The President’s executive order is a forward-looking move that seeks to expand financial opportunities for hardworking Americans. The executive order encourages the SEC to work with the Department of Labor to revisit outdated restrictions, which opens the door for 401(k) plans to include alternative assets—like venture capital, private credit, infrastructure, and digital assets—that are available to institutional investors and pension plans. When managed responsibly, these investments can offer meaningful diversification and long-term growth potential. With proper guardrails, retail investors should have the opportunity to obtain higher risk-adjusted returns on investments and build more resilient retirement portfolios.

While there may be disagreement over the specific amount of exposure to alternative investments, it is clear that retail investors should be permitted to have some level of exposure to such investments. The appropriate amount should not be zero, and there is data suggesting some exposure is beneficial. Authors of one economic paper suggest in preliminary findings that “‘democratization’ of private equity access has not come at the cost of directing individual investors toward inferior investment opportunities.”[11] Evaluation of market data and engagement with fellow regulators may result in a more optimal array of choice for retail investors.

I look forward to considering proposals in this area, reviewing market data, and hearing your questions today.