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No-Action Letter – Guidance on “Knowledgeable Employees”

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Dear Friends,

The SEC has released a No-Action letter providing guidance on individuals who qualify as “knowledgeable employees” under Rule 3c-5 of the Investment Company Act of 1940.

The Rule defines knowledgeable employee as any natural person who is an “executive officer, director, trustee, general partner, advisory board member, or person serving in a similar capacity” of a private fund or private fund adviser.

The no-action letter further clarifies that the following are also considered knowledgeable employees:

  • An executive officer of a principal business unit, which may be determined on a case-by-case basis through analysis of the adviser’s business operations
  • An employee without a senior manager title considered an executive officer because of day-to-day involvement in an adviser’s operations
  • A research analyst who researches only a portion of the portfolio
  • A non-executive employee that regularly participates in investment activities and has done so for at least 12 months
  • An employee participating in investment activities of a separate account pursuing similar strategies to the private fund
  • An employee deemed a knowledgeable employee of any other private fund managed by the same filing adviser or relying adviser

Please feel free to contact us with any questions at (212) 867-0200 or e-mail us at info@counselworksllc.com.

Thank you,

CounselWorks

www.CounselWorksllc.com

 

 

 

About CounselWorks LLC

CounselWorks is a strategic business and regulatory consulting firm, that provides project-based consulting and manages compliance and regulatory programs for hedge funds, private equity firms, investment companies, broker-dealers and investment banks.
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