Source: Fortune
Summary
Federal prosecutors are investigating valuation practices at BlackRock’s private credit fund, TCP Capital Corp. (TCPC). The Manhattan US Attorney’s office has been seeking information and questioning executives as part of the probe. The investigation comes after TCPC announced a 19% cut in its asset value, leading to a 13% drop in shares. Class-action lawsuits have been filed against the company, alleging “materially false” statements and improper valuation of loans.
Our Reading
The numbers tell one story.
BlackRock’s TCPC fund is under scrutiny for its valuation practices. The fund’s 19% markdown in January sent shares plummeting, and class-action lawsuits have followed. The investigation highlights the risks of private credit markets, where valuations can change quickly. BlackRock acquired TCP in 2018 and has since brought in HPS Investment Partners to help manage the fund. The probe is a reminder that “mismarking” assets to generate fees is a “no-no,” as US Attorney Jay Clayton put it.
BlackRock’s timing on transparency is a signal.
Author: Evan Null
