TCPC shares have fallen nearly 24% this year amid broader pressure across the private credit industry.
Federal prosecutors are reportedly examining valuation practices at a private credit fund managed by BlackRock, intensifying scrutiny on transparency and pricing methods in the booming private credit market.
The investigation centers around BlackRock TCP Capital Corp. (TCPC), a publicly traded business development company. According to sources familiar with the matter, the Manhattan US Attorney’s Office has requested information from the firm and questioned executives linked to the fund.
The probe comes as regulators increase oversight of private credit markets, where asset valuations are often difficult to verify due to the lack of active trading markets.
Jay Clayton, head of the Southern District of New York, recently warned that regulators are watching private asset valuations closely. He stated that improperly valuing assets to increase fees is a major regulatory concern.
Massive Valuation Cut Shocked Investors
Investor fears escalated in January when TCPC made an unusual off-cycle disclosure revealing it expected to reduce the value of its assets by nearly 19%.
The announcement triggered a sharp selloff, with the fund’s shares plunging 13% in one day — marking the steepest decline since the pandemic-era market crash of March 2020.
A month later, the fund officially reported its net asset value had dropped to $7.07 per share from $8.71 in the previous quarter.
Lawsuits and Growing Industry Pressure
Following the disclosure, multiple class-action lawsuits were filed by investors alleging the fund made misleading statements and failed to properly value its loan portfolio.
The case has become one of the strongest examples of growing stress inside the $1.8 trillion private credit industry, where investors heavily rely on internal valuation models due to limited market transparency.
TCPC shares have fallen nearly 24% this year amid wider concerns over lending standards, borrower defaults, and pressure across private lending markets.
BlackRock acquired TCP Capital from Tennenbaum Capital Partners in 2018. After BlackRock’s acquisition of HPS Investment Partners last year, HPS executives were brought in to help manage the troubled fund.
