CALIFORNIA — The California Department of Financial Protection and Innovation (DFPI) issued an order on March 16 suspending Pacific Private Money’s California Financing Law license for 30 business days.
The company halted investor withdrawals, leaving funds temporarily inaccessible.
“This action prevents new lending activity but does not affect existing legal loans in progress,” a spokesperson said.
Pacific Private Money operates as a private credit lender. Private credit refers to loans made by non-bank lenders using investor funds instead of traditional bank deposits.
According to the order, the Novato-based real estate lender stopped monthly investor distributions and froze withdrawals in October or November.
This raised concerns about the recovery of roughly $100 million in investor funds.
Company representatives told regulators on March 9 that it experienced a “severe liquidity crunch” in December, leaving it without sufficient funds to continue investor payouts.
The agency issued a notice of intent to suspend the license the following day, giving the company until March 16 to request a hearing. No request was received.
The Marin County District Attorney’s Office is also reviewing complaints from a “significant number” of investors. More than 100 investors are believed to be affected.
The company appointed a restructuring officer in December, but its Novato office has since closed.
Private credit withdrawal limits rising nationwide
Pacific Private Money’s troubles are not happening in isolation.
The private credit industry — now a roughly $1.5 trillion to $2 trillion market — is facing growing pressure as investors try to pull money from loans that aren’t easily sold.
Many of these investors are individuals seeking higher returns who placed money into real estate-backed loans, even though those investments can be harder to access quickly.
In recent weeks, several major asset managers have limited investor withdrawals as requests increased.
BlackRock capped withdrawals from a $26 billion private credit fund after requests exceeded its preset limit. Blackstone allowed more withdrawals than usual and used its own money to help meet investor demand.
Blue Owl Capital has restricted or delayed redemptions in certain funds, while Morgan Stanley limited withdrawals after requests outpaced allowed thresholds.
These measures, often called “gates,” are standard in private credit funds and are designed to prevent forced asset sales when too many investors try to withdraw at once.
Investors want quick access to cash
Analysts say the trend highlights a key tension – investors want quick access to cash, but the assets can take months or years to sell.
“It should serve as a warning sign for the industry and the rulemakers about the downside of illiquid funds for retail investors,” said Greggory Warren, a senior stock analyst at Morningstar.
The DFPI regulates financial services and lenders in California and can suspend licenses — as it did with Pacific Private Money, to protect consumers.
