On February 6, 2014, the Division of Investment Management of the Securities and Exchange Commission (the SEC) released guidance expanding the categories of individuals who may be deemed “knowledgeable employees” under Rule 3c-5 of the Investment Company Act of 1940 and therefore who may invest in private funds without meeting the qualified purchaser standard to include individuals such as investor relations employees or policy-making employees who do not actively manage the fund itself.
In a letter to the Managed Funds Association, the SEC stated that depending on the particular facts and circumstances of an investment adviser’s business operations and regardless of the size of the investment adviser, certain types of individuals may be regarded as knowledgeable employees.