A qualified institutional buyer (QIB), in United States law and finance, is a purchaser of

securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...

that is deemed financially sophisticated and is legally recognized by securities market regulators to need less protection from issuers than most public investors. Typically, the qualifications for this designation are based on an investor's total

assets under management In finance, assets under management (AUM), sometimes called fund under management, refers to the total market value of all financial assets that a financial institution—such as a mutual fund, venture capital firm, or depository institutio ...

and specific legal conditions in the country where the fund is located.

Rule 144A Rule 144A. Securities Act of 1933, as amended (the "Securities Act") provides a safe harbor from the registration requirements of the Securities Act of 1933 for certain private resales of minimum $500,000 units of restricted securities to quali ...

requires an institution to manage at least $100 million in securities from issuers not affiliated with the institution to be considered a QIB. If the institution is a bank or savings and loans thrift they must have a net worth of at least $25 million. If the institution is a registered dealer acting for its own account it must in the aggregate own and invest on a discretionary basis at least $10 million of securities of issuers not affiliated with the dealer. Certain

private placement Private placement (or non-public offering) is a funding round of securities which are sold not through a public offering, but rather through a private offering, mostly to a small number of chosen investors. Generally, these investors include frien ...

s of

stocks Stocks are feet and hand restraining devices that were used as a form of corporal punishment and public humiliation. The use of stocks is seen as early as Ancient Greece, where they are described as being in use in Solon's law code. The law de ...

and bonds are made available only to qualified institutional buyers to limit regulatory restrictions and public filing requirements.

Requirements

The U.S. Securities and Exchange Commission (SEC) requires that an entity meet one of the following requirements to qualify as a QIB: * Any of the following entities, acting for its own account or the accounts of other QIBs, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with the entity: :* An insurance company :* An investment company registered under the

Investment Company Act of 1940 The Investment Company Act of 1940 (commonly referred to as the '40 Act) is an act of Congress which regulates investment funds. It was passed as a United States Act of Congress, Public Law () on August 22, 1940, and is codified at . Along with th ...

:* A Small Business Investment Company licensed by the US Small Business Administration under the Small Business Investment Act of 1958 :* A plan established and maintained by a state, its political subdivisions, or state agency, for the benefit of its employees :* An employee benefit plan falling under the Employee Retirement Income Security Act of 1974 :* A trust fund whose trustee is a bank or trust company and whose participants are exclusively plans established for the benefit of state employees or employee benefit plans, except trust funds that include as participants individual retirement accounts or H.R. 10 plans :* A business development company as defined in section 202(a)(22) of the

Investment Advisers Act of 1940 The Investment Advisers Act of 1940, codified at through , is a United States federal law that was created to monitor and regulate the activities of investment advisers (also spelled "advisors") as defined by the law. Passing unanimously in both t ...

. :* A 501(c)(3) charitable organization, corporation (other than a bank or a savings and loan association), partnership, or Massachusetts or similar business trust; and :* An investment adviser registered under the

. * Any registered dealer, acting for its own account or the accounts of other QIBs, that in the aggregate owns and invests on a discretionary basis at least $10 million of securities of issuers that are not affiliated with the dealer. * Any registered dealer acting in a riskless principal transaction on behalf of a ''qualified institutional buyer''. * Any investment company registered under the Investment Company Act, acting for its own account or for the accounts of other QIBs, that is part of a family of investment companies which own in the aggregate at least $100 million in securities of issuers, other than issuers that are affiliated with the investment company or are part of such family of investment companies. * Any entity, all of the equity owners of which are QIBs, acting for its own account or the accounts of other QIBs. * Any bank or any savings and loan association or other institution, acting for its own account or the accounts of other QIBs, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of issuers that are not affiliated with it and that has an audited net worth of at least $25 million as demonstrated in its latest annual financial statements, as of a date not more than 16 months preceding the date of sale under

in the case of a US bank or savings and loan association, and not more than 18 months preceding the date of sale for a foreign bank or savings and loan association or equivalent institution.PLC - Qualified Institutional Buyer (QIB)
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References

{{reflist Financial regulation

Requirements

See also

References