Part 8/11:
U.S. regulators appear to be stepping in, signaling increased scrutiny. Recent reports indicate that they are probing firms like HPS Investment Partners, suspecting misrepresentation and fraudulent receivables. The regulators’ investigation suggests that some private credit strategies may have been built on shaky foundations, with deliberately opaque practices designed to inflate asset valuations.
This heightened oversight echoes past regulatory interventions, where lax diligence during boom times gave way to crash-and-burn scenarios. As Jeff and others warn, complacency and greed have historically led to disastrous outcomes, particularly when times are buoyant and everyone’s seeking high returns.