In a February 2015 Guidance Update, the Securities and Exchange Commission’s Division of Investment Management (“SEC”), provided guidance on the acceptance of gifts or entertainment by fund advisory personnel under Section 17(e)(1) of the Investment Company Act of 1940 (the “Act”). Section 17(e)(1) provides that any affiliated person of a registered investment company, or any affiliated person of such person acting as agent, is prohibited from receiving any compensation, outside of regular salary or wages, for the purchase or sale of any property to or for the registered company or any controlled company thereof. The SEC has found that gifts or entertainment meet the definition of “compensation” as it is used in Section 17(e)(1), and proof of any intended or actual influence is not required. Pursuant to Rule 38a-1 of the Act, a fund must implement written policies and procedure designed to prevent the fund and its service providers from violating securities laws. The Guidance Update suggests that the policies and procedures concerning the receipt of gifts or entertainment should be included in the fund’s compliance policies and procedures, though it defers to the fund to determine whether there should be an outright ban, or a type of pre-clearance to determine if the gift or entertainment would violate Section 17(e)(1).