On February 7, 2014 the staff of the Division of Investment
Management of the Securities and Exchange Commission (the
"SEC") issued a no-action letter to the Managed Funds
Association (the "No-Action Letter"), providing guidance
on the definition of knowledgeable employee for purposes of Rule
3c-5 under the Investment Company Act of 1940 (the "Investment
Company Act"). Section 3(c)(1) and Section 3(c)(7) of the
Investment Company Act set forth the primary exemptions relied on
by private funds in order to remain exempt from registration as
investment companies.
Section 3(c)(1) excludes funds whose outstanding securities are
beneficially owned by no more than 100 persons and that is not
making and does not presently propose to make a public offering of
its securities. Section 3(c)(7) excludes funds whose outstanding
securities are owned exclusively by persons who, at the time of
acquisition, are "qualified purchasers," and which is not
making and does not at that time
