Are Your Employees Now “Knowledgeable”? New SEC Guidance for Private Fund Managers

6 March 2014
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Key takeaways:

  • A recent SEC no-action letter updates guidance on the types of employees who can be deemed “knowledgeable employees” under the private fund provisions of the Investment Company Act.
  • The new guidance clarifies that employees who serve a policy-making function (even if as part of a group) may be treated as knowledgeable employees. The new guidance also provides greater flexibility in determining whether an employee contributes materially to the investment activities of the fund.
  • Fund sponsors may wish to review their policies and procedures for identifying “Knowledgeable Employees” based on this guidance.