Under U.S. securities laws, the issuance of securities requires registration with the SEC or an exemption from registration.   For employees who are not accredited investors, the fund should consider ways to compensate such employees that do not involve the issuance of securities unless there is an exemption such as through a stock option plan. Note that the definition of accredited investor does include "knowledgeable employees" of certain private funds.  This includes directors and certain executive officers of the private fund, or of an affiliated person of the private fund that manages the investment activities of the private fund (“affiliated management person”). This also includes employees who participate in the investment activities of the private fund or other private funds or investment companies managed by the affiliated management person.