Amid the private credit storm, nearly a quarter of staff in relevant U.S. SEC regulatory departments have left.

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According to a recent report, the department of the U.S. Securities and Exchange Commission (SEC) responsible for overseeing hedge funds, private credit firms, mutual funds, and various investment products saw nearly a quarter of its staff leave last year.

The Government Accountability Office (GAO) reported on Friday that the SEC’s Division of Investment Management lost 24% of its employees in the 2025 fiscal year, resulting in a "loss of rulemaking expertise." In other words, many professionals who draft regulatory rules have left this SEC division.

This staff turnover comes as a surge in U.S. private credit drives stricter scrutiny of various funds and investor sentiment turns cautious. Some of the largest asset management firms, including Apollo Global Management and Ares Management, have recently restricted investors from withdrawing funds from certain offerings.

Although the departure rate was highest in the SEC’s Division of Investment Management, overall nearly 18% of SEC employees left during the same period. Some of these departures are linked to broader personnel changes across the federal government, triggered by the "Department of Government Efficiency" initiative promoted by Elon Musk.

The GAO stated that those leaving "either possess unique knowledge or have specialized expertise," and these personnel changes may "pose risks to the agency’s ability to fulfill its mission." The report said that of the roughly 5,000-employee agency, a total of 871 staff left, with 599 participating in a voluntary separation program.

An SEC spokesperson said the agency still retains enough staff to perform its duties, adding that SEC Chairman Paul Atkins is working to ensure 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 dedicated public servants already here to continue protecting investors, promoting capital formation, and maintaining fair, orderly, and efficient markets."

The GAO also noted that in fiscal year 2026, after the SEC offered another round of voluntary early retirement and incentive compensation, an additional 42 employees left the agency.

A Wallstreetcn article this week mentioned that the U.S. SEC has recently inquired whether credit rating firm Egan-Jones can continue to issue credit ratings with integrity. This inquiry is not routine review, but a public challenge by the regulator to the reliability of the core mechanisms of the private credit market. As redemption gates close and asset valuations are questioned, responsibility shifting among market participants is accelerating.

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