Full Breakdown
DOJ Probe of BlackRock TCP Capital Corp.’s Valuation Practices
5/16/2026, 10:56:50 AM
Core Event: Federal Inquiry into TCPC Valuations
The Manhattan U.S. Attorney’s Office has been requesting information from BlackRock TCP Capital Corp. (ticker TCPC), a publicly traded business-development company, and has questioned its executives. The investigation focuses on whether the fund’s loan-portfolio valuations were misstated, a matter that could affect the fees managers collect. The probe’s scope—whether it is part of a broader Southern District of New York (SDNY) inquiry—has not been confirmed.
Background & Context: Private-Credit Market and BDC Valuation Mechanics
TCPC operates in the $1.8 trillion private-credit market, where business-development companies (BDCs) rely on internal marks because their assets lack an active secondary market. These marks determine entry and exit prices for investors and influence fee calculations. In January 2026 the fund filed an off-cycle disclosure indicating a preliminary net-asset-value (NAV) per share of $7.05-$7.09, a 19 % reduction from the prior period’s $8.71. Such a sharp markdown is among the most dramatic in recent private-credit history.
Timeline of Key Developments
- November 2025: SDNY U.S. Attorney Jay Clayton warned that regulators were scrutinizing private-asset valuations.
- January 2026: TCPC announced an expected 19 % asset-value cut; the preliminary NAV range was disclosed.
- January 26 2026: Shares fell 13 %—the steepest drop since March 2020—after the disclosure.
- May 15 2026: Bloomberg reported the ongoing DOJ probe and noted that TCPC’s shares have declined 24 % year-to-date amid a broader private-credit downturn.
- 2025-2026: BlackRock’s acquisition of HPS Investment Partners placed three HPS executives on TCPC’s seven-member investment committee.
Official Statements & Responses
Jay Clayton, U.S. Attorney for the SDNY, said in November that “people should know that the financial regulators and the department are looking at those.” He added, “if people are mismarking in order to generate fees, that’s always been a no-no.” A spokesperson for the Southern District of New York declined to comment on the specific investigation.
Criticism & Opposition
Class-action lawsuits have been filed on behalf of investors alleging that TCPC made “materially false” statements and failed to properly value its loan portfolio. Critics argue that inaccurate marks can inflate fee revenue and mislead shareholders about the fund’s financial health.
Conflicting Reports & Gaps
Sources differ on whether the TCPC investigation is an isolated inquiry or part of a larger SDNY effort targeting private-credit valuations. The SDNY has not provided clarification, leaving the precise focus and potential outcomes of the probe uncertain.
Verbatim Quotes
- “people should know that the financial regulators and the department are looking at those.” — Jay Clayton, U.S. Attorney, Southern District of New York
- “if people are mismarking in order to generate fees, that’s always been a no-no.” — Jay Clayton, U.S. Attorney, Southern District of New York
What’s Next: Potential Regulatory and Market Implications
The DOJ investigation remains active, and any findings could prompt additional enforcement actions or new guidance on BDC valuation practices. Investors are watching for further disclosures from TCPC and possible reforms that might affect fee structures and transparency across the private-credit sector.
