---
title: "SEC Probes Private Equity's Booming 'Continuation Funds,' Reuters Reports"
description: "U.S. securities regulators are investigating continuation vehicles, the increasingly popular tool private equity firms use to hold onto aging assets, in a fresh sign of tightening scrutiny over a fast-growing corner of private markets, according to a Reuters report. No wrongdoing has been alleged."
category: "Economy"
category_url: https://boursel.com/category/economy
author: "Sofia Marchetti"
published: 2026-06-24T10:28:00.000Z
updated: 2026-06-24T10:28:00.000Z
canonical: https://boursel.com/article/sec-probes-private-equity-continuation-funds
tags: ["private-equity", "sec", "continuation-funds", "regulation", "private-markets"]
---
# SEC Probes Private Equity's Booming 'Continuation Funds,' Reuters Reports

U.S. securities regulators are investigating continuation vehicles, the increasingly popular tool private equity firms use to hold onto aging assets, in a fresh sign of tightening scrutiny over a fast-growing corner of private markets, according to a Reuters report. No wrongdoing has been alleged.

The U.S. Securities and Exchange Commission is examining a class of private equity vehicle that has exploded in popularity in recent years, [Reuters reported in an exclusive](https://finance.yahoo.com/markets/stocks/articles/exclusive-us-sec-probes-popular-100730205.html), citing three people familiar with the matter. The agency's enforcement staff is scrutinizing so-called continuation vehicles, the report said. The inquiry is at the investigative stage and does not indicate that regulators have found any misconduct.

## How a continuation fund works

Private equity firms raise money from large investors such as pension funds and endowments, buy companies, improve them and aim to sell them at a profit, typically returning cash within about a decade. A continuation vehicle works differently: instead of selling a company to an outside buyer when a fund's life ends, the firm sells the asset to a new fund that it also manages, allowing it to keep holding prized investments for longer.

That structure sits at the heart of the SEC's interest. Because the same firm effectively sits on both sides of the deal — seller and buyer — the arrangement can create a [conflict of interest](https://www.dakota.com/resources/blog/what-are-continuation-vehicles-how-theyre-reshaping-private-equity-secondaries). According to Reuters, enforcement staff are looking at how managers value the assets being moved, whether conflicts are properly handled, and whether disclosures to investors are sufficient and consistent.

## From niche to mainstream

The vehicles have moved from the margins to the center of private markets. Manager-led secondary transactions, which are dominated by continuation vehicles, reached a record [roughly $106 billion in 2025](https://www.kroll.com/en/publications/transaction-opinions/secondary-market-evolution-continuation-funds-alternative-traditional-exits), up from about $70 billion the year before, Reuters reported. The growth has coincided with a slower market for traditional exits, leaving sponsors holding more than 30,000 unsold portfolio companies, the report said — assets they would rather keep than sell cheaply.

## A broader regulatory posture

The probe fits a wider stance at the SEC. At an industry conference on May 13, the agency's enforcement director, David Woodcock, said the SEC is ["attuned to potential risks relating to liquidity, fees, valuations, and conflicts of interest — not only at the private fund adviser level but throughout the distribution chain,"](https://www.investmentnews.com/regulation-legal-compliance/we-are-monitoring-the-situation-sec-says-of-private-funds/266569) signaling a "back to basics" focus on disclosure and valuation.

Reuters reported that heightened scrutiny was spurred in part by problems at funds tied to Blue Owl and BlackRock in late 2024; both firms either declined to comment or did not respond. The report also referenced Energy & Minerals Group, which faced a legal complaint from the Abu Dhabi Investment Council over a continuation-vehicle sale and called the claims "baseless." The SEC declined to comment.

The regulatory backdrop is shifting in more than one direction. Rules adopted in 2023 to curb sponsor conflicts in such deals were largely set aside after a court challenge, and the SEC has since [proposed paring back related reporting requirements](https://www.proskauer.com/alert/sec-and-cftc-propose-rollback-of-form-pf-requirements). The investigation suggests enforcement attention is continuing even as some rulemaking eases.

The scope, timeline and potential outcome of the inquiry remain unclear. An investigation does not necessarily lead to enforcement action, and none of the firms named has been accused by the SEC of wrongdoing.