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.