Schulte Roth & Zabel partner and co-chair of the Investment Management Regulatory Group, Kelly Koscuiszka, discussed the “back to basics” approach for regulators and clients in the private credit industry at the Bloomberg Hedge Fund & Alternative Manager Forum. 

Kelly stated that, in light of the explosive growth in private credit the past few years, valuation is high on the list of regulatory focus areas. She emphasized the importance of clients being process-oriented and able to defend their valuation if questioned by examiners. 

Kelly expressed that developments in AI are mind-blowing but stressed the importance of implementing policies and procedures that ultimately will pass muster with SEC examiners. “The SEC has said it’s open to innovation and even held a roundtable, but didn’t really tell us what we should or shouldn’t be doing. Sometimes that’s beneficial early on, as long as you feel confident that they won’t come down hard on you if they disagree with what you’ve done.”