During the private credit storm, nearly a quarter of the staff have left the relevant regulatory agencies of the U.S. SEC.

According to a recent report, nearly a quarter of the employees in the department of the U.S. Securities and Exchange Commission (SEC) responsible for regulating hedge funds, private credit firms, mutual funds, and various investment products left their jobs last year.

The Government Accountability Office (GAO) released a report on Friday indicating that the SEC’s investment management division experienced a 24% employee turnover rate in fiscal year 2025, and there has been a “loss of expertise in rule-making.” This means that many professionals capable of formulating regulatory rules have departed from this SEC division.

This personnel turnover comes at a time when funds driven by the U.S. private credit boom are facing stricter scrutiny and investor sentiment is becoming more cautious. Some of the largest asset management companies, including Apollo Global Management and Ares Management, have recently restricted investors from withdrawing funds from certain funds.

Although the SEC’s investment management division has the highest turnover rate, the overall employee turnover at the SEC reached as high as 18% during the same period. Part of the departures is related to broader federal personnel changes triggered by the “Government Efficiency” initiative pushed by Musk.

The GAO stated that departing employees “either possess unique knowledge or have specialized expertise in specific fields,” and these personnel changes could “pose risks to the agency’s ability to fulfill its mission.” The report noted that this approximately 5,000-person agency had 871 employees leave, of which 599 accepted voluntary separation packages.

An SEC spokesperson stated that the agency still has the necessary personnel to fulfill its responsibilities and added that SEC Chairman Paul Atkins is working to ensure that any hiring needs are met in a timely manner. The spokesperson said, “Voluntary departures create opportunities for new talent to join, who will work alongside the existing dedicated public servants to continue protecting investors, promoting capital formation, and maintaining fair, orderly, and efficient markets.”

The GAO also pointed out that after the SEC offered a new round of voluntary early retirement and incentive compensation in fiscal year 2026, another 42 employees left the agency.

An article on the Wall Street Journal website this week mentioned that the SEC has recently inquired whether credit rating agency Egan-Jones can continue to issue credit ratings with integrity. This statement is not a routine review but rather a public questioning by the regulatory agency of the reliability of the core mechanisms of the private credit market. As redemption gates continue to close and asset valuations are questioned, accountability among market participants is accelerating.

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