Enforcement officials at Wall Street’s top regulator are monitoring potential risks in the private funds sector, the agency’s newly installed enforcement chief said Wednesday.

The US The comments by David Woodcock, director of enforcement at the Securities and Exchange Commission, were a clear acknowledgment of continued concern for the asset class. Private credit has become a focus of concern on Wall Street due to fears of AI risks, fund outflows and credit stress.

“We are exposed to potential risks related to liquidity, fees, valuation and conflicts of interest, not only at the advisory level of private funds, but throughout the distribution chain,” said David Woodcock, director of enforcement at the US Securities and Exchange Commission. “Firms must ensure that their representatives understand the products they sell and, ultimately, their clients’ investment profiles, risk tolerance and liquidity needs.”

Woodcock, a corporate attorney who previously ran the SEC’s Ft. Worth took over as enforcement director last month following the sudden departure of former regional office director Margaret Ryan, who quit after clashing with the agency’s leadership, as Reuters previously reported.

Woodcock also addressed recent statistics showing a sharp decline in SEC enforcement activity, saying the agency has decided to prioritize its efforts.

“I want to be clear that the commission has deliberately moved to emphasize quality over quantity, and I fully support that direction,” Woodcock said. “Our focus is and will remain on protecting investors and protecting markets from real harm.”