Level 3 asset

A Level 3 asset is one whose fair value depends on at least one key input that cannot be observed in the market, so it is valued from management estimates or models. Under the accounting fair value hierarchy it is the category with the least price transparency and the most room for judgment.

manipulation techniques · updated 2026-09-20

Where does level 3 asset come up?

This term is used in the following manipulation techniques, each explained in full on its own page.

• Mismarking — Mismarking is deliberately recording the value of positions or portfolio assets away from what they are worth, to hide losses, inflate a fund's reported performance or raise pay and fees, without any trade in the open market.

Enforcement actions involving these techniques

See also

• Marking-to-model — Marking to model values a position using a valuation model rather than an observed price, which is unavoidable for illiquid instru…
• Mismarking — Mismarking is deliberately recording the value of a position or portfolio asset away from what it is worth, to hide a loss, inflat…

Back to the full glossary — 261 defined terms.