As Reuters reported Wednesday (June 24), continuation vehicles (CVs) are a type of fund usually employed by private equity outfits and other money managers to hold on to assets they either can’t or don’t want to sell.
The SEC’s enforcement division has in recent months honed in on a number of these funds, Reuters said, citing sources familiar with the matter. The probe centers on potential conflicts of interest around the CVs, how managers are valuing the assets, and whether investor disclosures go far enough, the sources said.
A spokesperson for the SEC declined to comment when reached by PYMNTS.
The Reuters report, citing data from Evercore, added that CVs have jumped in popularity, with the value of fund manager-led secondary transactions coming to $106 billion last year.
Most private equity funds have a life cycle of around a decade, Reuters said. With a CV, managers can court new investors and shift assets from older funds into a new vehicle, extending the holding period while offering existing investors a chance to cash out.
Thus, CVs are a way for managers to give cash back to investors without having to sell assets at a discount or to competitors.
Although SEC examiners have been examining private fund issues, including CVs for some time, Reuters said the escalation of the issue to the enforcement division spotlights increasing concerns among regulators about issues in private markets.
Last month, SEC Chairman Paul S. Atkins said the regulator was investigating allegations of fraud in private credit markets.
Speaking at the Milken Institute’s Global Conference 2026, Atkins argued that it’s good that private markets exist because small- to medium-sized businesses would otherwise have trouble accessing credit.
“So, luckily, the private markets are there to step in and provide the capital because we do have robust private capital markets here in the United States on both the equity side and the credit side,” Atkins said. “So, our economy would not be anywhere near what it is now, especially for small and medium-sized businesses which provide most of the job creation on our economy. So, thank goodness for that.”
Also in May, Federal Reserve Gov. Michael Barr told Bloomberg News that stress in the private credit market could lead to “psychological contagion” and trigger a wider credit crunch.
Barr added that while direct connections between banks and private credit were not yet “super worrisome,” there were other areas where he saw cause for concern, like the insurance industry’s links to private lenders.