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Industry Prep for Valuation Rule Comes with Concerns: Survey

Board IQ

With a bit less than a year left before funds must comply with the Securities and Exchange Commission’s new fair valuation rule, complexes are grinding through the work necessary to get ready. But many in the industry have questions—like what constitutes a “material” matter that must be promptly reported to the board—and some are concerned about the requirement that boards provide active oversight of the valuation process, according to the latest Deloitte fair valuation survey.


“For a board, that is a very slippery issue,” said Blank Rome partner Thomas Westle. “We as counsel oftentimes have to caution a board not to get too far into the weeds that they are infringing on management.”

With fair valuation oversight, directors should understand valuation policies and procedures as well as the methodologies used. If there’s a deviation, directors should understand what caused it, Westle said. But boards “will be relieved to know they no longer are being asked to approve a specific valuation or that the valuation is reasonable,” he said.


Fund groups and boards that Westle works with are now compiling revised fair valuation policies and procedures and, as part of that, determining what might be considered material, said Westle, the Blank Rome partner. Directors are “making it very clear” they want draft policies and procedures long before being asked to approve them, he said.

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“Industry Prep for Valuation Rule Comes with Concerns: Survey,” by Greg Saitz was published in Board IQ on October 5, 2021