SEC 2027 Exam Priorities for Private Credit Managers: Valuation, Conflicts and the AI Records to Have Ready

1. The Short Answer: Private Credit Is a Named Exam Area

The SEC's 2027 exam priorities, published on October 23, 2026, name private credit as a key area: the press release lists "Private funds, private credit, and other complex investment strategies." The document points examiners at valuation, conflicts, fees and expenses, fund-level lines of credit and registered funds that hold private credit.

The same document calls AI "super intelligence (SI)" and makes policies for monitoring it an exam priority. In WorkWise Solutions' view, a credit team that drafts memos or monitors borrowers with AI should keep those records in the same exam file as its marks.

This guide quotes the priorities with page numbers and labels WorkWise Solutions' recommendations. The guide is operational guidance; counsel and your CCO own the interpretation.

Start with valuation. A mark feeds fees, investor reports and conflicts, so the valuation file holds up every other row.

2. What the Priorities Say About Private Credit, Quoted

These are the passages a credit manager needs, with the page numbers printed in the priorities.

• Private fund advisers (p. 6). "Examples include disclosures related to certain investments and allocations, use of debt and fund-level lines of credit, use of affiliated service providers, and the accuracy of fee and expense calculations at both the fund and investment levels."
• Valuation (p. 5). Whether advisers "assessed the reasonableness of their valuation processes and methodologies."
• Conflicts (p. 5). "The Division will prioritize reviewing advisers' fiduciary obligations relating to economic conflicts of interest."
• Illiquid products (p. 6). Products "such as loans provided by private funds or business development companies (BDCs)".
• Registered funds (p. 7). "This includes RICs holding complex products, less liquid or illiquid investments, including private credit, and the associated issues regarding valuation, redemptions, and disclosures of conflicts of interest and risks."
• SI (pp. 2 and 12). The standard is "whether firms continue to comply with existing, technology-neutral obligations," and the Division will prioritize "policies and procedures relating to monitoring SI".
• Fraud and privacy (pp. 12 to 13). SI-generated phishing and "synthetic or deepfake voice and video used for social engineering," updates to the Identity Theft Prevention Program, and response programs under amended Regulation S-P.

Two things are missing. The document never uses the words "interval fund", and it has no wording about allocation among affiliated funds. On allocations, the page 6 phrase is general: "certain investments and allocations".

The list is also open-ended. Page 5 says the listed areas "are not the only areas the Division will address in examinations," and the disclaimer calls the document "the views of the staff of the Division of Examinations."

Read the page 6 sentence as the outline of your exam file. Each phrase becomes a folder.

3. Valuation of Hard-to-Value Loans

Page 5 asks whether advisers "assessed the reasonableness" of their valuation processes and methodologies. In WorkWise Solutions' reading, that calls for evidence the firm tested its own process, as well as the marks the process produced.

For a book of private loans, WorkWise Solutions would have this file ready:

• The methodology, written for each kind of loan, with its inputs and who supplies them.
• Committee minutes that record the challenges raised as well as the marks approved.
• A challenge and override log: who questioned a mark, what changed and who approved it.
• A back-test comparing past marks with the prices at which loans were later repaid, sold or restructured.
• Outside work, if you use a valuation agent: the scope, and how the committee used the result.

AI has a real job here. It can pull borrower financials and covenant data into the valuation template, draft the memo that explains a mark, and check that each write-up follows the stated methodology. People set the marks, and the minutes should show who did. The guide to AI for private credit valuation covers the workflow.

A model can explain a mark in fluent prose. Only the committee can own it.

4. Allocations, Credit Lines, Affiliates and Fees

Page 6 gives four examples for private fund advisers. Each maps to records you can pull now; what follows is WorkWise Solutions' view of the file.

• Investments and allocations. The allocation policy, a record for each deal of who received what and why, and the disclosure that describes the practice. If several of your vehicles invest in the same loans, ask counsel how far those records should go; the priorities don't address allocation among affiliated funds.
• Debt and fund-level lines of credit. The disclosure that says when and why the fund borrows, the draw and repayment history, and a reconciliation of the two.
• Affiliated service providers. Every affiliate the fund or its borrowers pay, what each charged, where the fees are disclosed and who approved the arrangement.
• Fees and expenses at both levels. The calculation model, the fund-document and side-letter terms it applies, a tie-out to the general ledger and a re-performed sample. For a lender, the investment level includes fees earned on each loan.

AI earns its keep on the fee row. It can read the fund documents and side letters, list every fee term, and flag calculations that don't match. Someone who knows the documents decides what each term means.

Re-perform a sample of the math yourself, before an examiner asks to see it.

5. Economic Conflicts of Interest

Page 5 makes advisers' fiduciary obligations on economic conflicts of interest a priority. Its footnote cites the Division's June 9, 2026 risk alert on economic conflicts, which covers fee and compensation conflicts and does not discuss private funds.

So the priorities give credit managers no conflicts checklist of their own. WorkWise Solutions' view: map every way the firm or an affiliate earns money from a deal beyond the management fee, and every borrower where two of your clients sit on different sides.

• Fees from borrowers, such as closing, amendment or monitoring fees, and whether the fund or the manager keeps them.
• Affiliates paid by the fund or by borrowers.
• Holdings in one borrower across funds or levels of the capital structure.
• Pay that rewards one outcome over another, such as compensation tied to deployment.

Keep each one in a conflicts register with its disclosure, its mitigation and the reviewer's sign-off. AI can compare the register with the disclosures and flag conflicts that appear in one and not the other. A person decides whether a conflict is acceptable.

Write the conflict down and disclose it before anyone else finds it.

6. Registered Funds and BDCs That Hold Private Credit

The document follows private credit beyond private funds. Page 6 names illiquid products "such as loans provided by private funds or business development companies (BDCs)", and page 7 covers RICs holding illiquid investments, "including private credit".

The words "interval fund" never appear. If you manage an interval fund or another registered fund that holds private credit, page 7 is the paragraph to read. It names three issues, and in WorkWise Solutions' view each needs a record:

• Valuation. The same file as section 3, kept at the frequency the fund prices.
• Redemptions. Every redemption or repurchase request, how the fund met it, and whether that matched the offering documents.
• Conflicts and risk disclosures. Where the registered fund invests beside your private funds, and whether the risk section describes illiquid loans plainly.

The operations behind these vehicles, from subscriptions to repurchases, are covered in AI for non-traded BDCs and interval funds.

Write the risk disclosure for the least expert reader the fund has.

7. SI in the Credit Process

The SI passages speak of registrants, and a registered credit manager is one. Page 2 describes firms using "generative SI tools to support research, drafting, coding, and client communications, as well as advisory and portfolio management functions," and page 12 makes monitoring SI an exam priority.

In a credit process, SI can show up in four places:

• Underwriting: spreading financials and reading credit agreements.
• Monitoring: covenant checks and borrower reporting.
• Memos: first drafts of credit and valuation memos.
• Investor materials: DDQ answers, letters and pitch decks.

WorkWise Solutions expects examiners' questions to follow the document's items: which tools, used for what, under which policy, monitored by whom, and described to investors how. Page 12 asks whether representations about automated investment tools "are fair and accurate," and in WorkWise Solutions' view the same logic reaches any claim your marketing makes about AI in underwriting.

Borrowers add one more question. Credit teams receive confidential and sometimes material non-public information, so the policy should say which SI tools may hold it. Use business plans, where data is kept under your organization's retention settings and is not used to train models by default.

For the full list of SI exam areas, with a document for each, see the 2027 exam priorities and super intelligence.

Treat AI in underwriting as a process with an owner, like spreading or covenant testing.

8. The Document File

One row per exam focus. The first two columns come from the priorities; the last two are WorkWise Solutions' operational view.

Each row ends in a dated document with an owner. The last column is the line to teach the team: AI prepares, people decide.

9. Where AI Helps You Prepare, and Where It Must Not

Exam preparation is mostly finding, comparing and drafting. In WorkWise Solutions' view, AI fits four jobs:

1. Finding documents. Point an assistant at the compliance drive and list what exists for each table row, and what is missing.
2. Checking consistency. Compare what the DDQ, pitch deck, website, Form ADV and policies say about valuation, fees, conflicts and AI, and flag every difference.
3. First drafts. Valuation memos, conflicts register entries and cover notes for a document request, each read and signed by its owner.
4. Re-performing math. Recalculate a sample of fees from the fund documents and flag mismatches for a person to resolve.

Keep it away from four decisions: setting or changing a mark, deciding an allocation, approving a conflict or an affiliate, and interpreting what a fund document or the priorities require.

Exam preparation gathers your most sensitive documents in one place, so do it inside a business plan the firm controls and record which tool you used. The guide to Claude for private credit covers the setup for a credit team.

AI can tell you a document is missing. A person decides what it should have said.

10. A 60-Day Plan

WorkWise Solutions' plan runs one step a week, each ending in a finished document:

1. Week 1: Owners. Read pages 5 to 7 and 12 to 13 of the priorities with your CCO, and name an owner for each table row.
2. Week 2: Valuation. Assemble the methodology, the last four quarters of committee minutes and the override log, and run the back-test.
3. Week 3: Allocations and credit lines. Pull allocation records for recent deals and reconcile line-of-credit draws to the disclosures.
4. Week 4: Fees and expenses. Re-perform a sample of calculations at the fund and loan levels and tie them to the ledger.
5. Week 5: Conflicts and affiliates. Update the conflicts register and the affiliate list, and check each against the disclosures.
6. Week 6: SI. Inventory the credit team's tools, update the use policy and monitoring procedure, and check every AI statement in DDQs and marketing.
7. Week 7: Fraud and privacy. Write a callback rule for any change to payment instructions, update the identity theft program if you keep one, and test the Regulation S-P response program with a vendor incident.
8. Week 8: Mock exam. Walk the table row by row with the CCO and someone playing examiner, then fix what fails.

If you also manage a registered fund, run its valuation, redemption and disclosure records through the same weeks. Sixty days is tight, and it works when every week ends with a signed document.

11. Where to Start

This week, before any letter arrives:

1. Read pages 5 to 7 of the priorities with your CCO.
2. Put the table in front of the team and name an owner for each row.
3. Start the valuation file, since every other row leans on the marks.
4. Ask the credit team which AI tools they use, for what and on which account.
5. Book the mock exam for week eight.

How an exam runs, from the request letter to the interviews, is covered in AI governance for an SEC exam.