{"text":[[{"start":10.6,"text":"Wall Street’s top prosecutor is examining valuation practices at a private credit fund managed by BlackRock, said people familiar with the matter."}],[{"start":19.049999999999997,"text":"The US Attorney’s Office for the Southern District of New York had in recent months sought information about BlackRock TCP Capital Corp, a publicly traded credit fund, the people said. "}],[{"start":29.449999999999996,"text":"The inquiry comes as regulators and prosecutors intensify scrutiny of valuation practices across the once fast-growing private credit industry, where firms have broad discretion in determining the value of illiquid assets."}],[{"start":42.849999999999994,"text":"Jay Clayton, head of the office, said this week that while he believed private credit had been good for the US economy, he would investigate potential wrongdoing within the industry. "}],[{"start":52.449999999999996,"text":"“If people are mismarking in order to generate fees, that’s always been a no-no,” he said, speaking at a conference for the alternative assets industry. He did not refer to any specific fund or institution. "}],[{"start":64.44999999999999,"text":"Prosecutors’ decision to look into the fund does not necessarily mean any wrongdoing took place or that a criminal case will be brought. The office can close matters after asking questions. "}],[{"start":75.85,"text":"There has been growing concern among investors that the valuations of the private credit industry’s loans to private companies have potentially been artificially inflated to boost fees and mask potential financial distress. These loans can sometimes have flexible terms, such as the option for borrowers to pay “in kind”, with additional debt instead of cash, which critics argue can stave off defaults."}],[{"start":99.75,"text":"Investors have attempted to pull tens of billions of dollars from private credit funds in recent months as worries have grown over the industry’s exposure to software companies, whose valuations have been thrown into the spotlight after recent advances in AI have threatened to cannibalise their businesses."}],[{"start":116.45,"text":"TCPC marked down the value of the loans it held in late January, writing down its assets by 19 per cent. Some of the fund’s problem loans included Razor Group and SellerX, which sold products on Amazon, as well as education technology company Edmentum."}],[{"start":132,"text":"A separate class action complaint filed against TCPC in February alleged that it had failed to disclose “material adverse facts” about its business. The California filing said the company’s net asset value had been overstated and positive statements about its business were misleading. "}],[{"start":148.1,"text":"It said investors lost out when the company marked down its net asset value in January, after which its stock price fell almost 13 per cent. "}],[{"start":157.15,"text":"BlackRock and the Southern District of New York declined to comment. Bloomberg first reported that prosecutors were looking into the fund."}],[{"start":165.75,"text":"The TCPC fund stems back to BlackRock’s acquisition of private credit manager Tennenbaum Capital Partners in 2018. "}],[{"start":180.75,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1778918704_3445.mp3"}