§2(a)(51)(A) of the Investment Company Act
- Natural person – Any natural person (including a spouse owning a joint or similar interest) who owns not less than $5,000,000 in "investments," as defined by the SEC;
- Family-Owned Companies – Any company that owns not less than $5,000,000 in investments and that is owned directly or indirectly by or for two or more natural persons who are related as siblings or spouse (including former spouses), or direct lineal descendants by birth or adoption, spouses of such persons, the estates of such persons, or foundations, charitable organizations, or trusts established by or for the benefit of such persons;
- Trusts – Any trust that was not formed for the specific purpose of acquiring the securities offered, and as to which the trustee and each settler are qualified purchasers.
- Institutional Purchasers – Any person, acting for its own account or the accounts of other qualified purchasers, who in the aggregate owns and invests on a discretionary basis, not less than $25,000,000 in investments.
|Qualified Eligible Person
CFTC Rule 4.7 under the Commodity Exchange Act
Generally speaking, a QEP is any person, acting for its own account or for the account of a qualified eligible person, who the commodity pool operator reasonably believes, at the time of the sale to that person of a pool participation in the exempt pool, or who the commodity trading advisor reasonably believes, at the time that person opens an exempt account, is one of the following:
- Certain registered commodities and securities professionals (e.g., futures commission merchants, registered broker-dealers);
- "Accredited investors" under the 1933 Act who the CPO also reasonably believes have a securities portfolio of at least $2,000,000 or have $200,000 on deposit as commodities margin or premium;
- Non-U.S. persons;
- "Qualified purchasers" under the Investment Company Act of 1940;
- "Knowledgeable employees" as defined in Rule 3c-5 under the 1940 Act and certain other "knowledgeable employees" as defined in CFTC Rule 4.7(a)(viii).
Rule 205-3(d)(1) of the Investment Advisers Act of 1940
1Special requirements apply for determining whether a company qualifies to ensure that the assets of smaller, otherwise non-qualified clients are not pooled together to circumvent the rule’s qualification standard.
- Natural persons or companies1 that have at least $750,000 under management with the adviser immediately after entering into the contract;
- Natural persons or companies that the adviser reasonably believes either have a net worth of more than $1,500,000 at the time the contract is entered or are "qualified purchasers"; or
- Natural persons who immediately before entering the contract are either executive officers, directors, trustees, general partners (or serve in similar capacities) of the adviser or employees of the adviser who in their regular functions have participated in the adviser’s—or another company’s—investment activities for at least 12 months.
Rule 501(a) of the Securities Act of 1933**
**Under Dodd-Frank, the Accredited Investor standard excludes a person’ primary residence from his or her net worth calculation.
- Institutions – Among others, any bank, savings and loan association, registered broker or dealer, insurance company, registered investment company or business development company. Additionally, "accredited investor" includes any employee benefit plan established and maintained by a state (or its subdivision or agencies) if the plan has total assets over $5,000,000, as well as any employee benefit plans within the meaning of ERISA, if the investment decision is made by a plan fiduciary which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the plan has total assets in excess of $5,000,000, or if the plan is a self-directed plan, with investment decisions made solely by persons that are accredited investors;
- Partnerships, Charitable Organizations and Other Organizations – Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
- Executives – Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;
- **Natural Persons/Net Worth Test – Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000;
- Natural Persons/Income Test – Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
- Trusts – Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a "sophisticated person" as described in Rule 506(b)(2)(ii); and
- Entity Owned Solely by Accredited Investors - Any entity in which all of the equity owners are accredited investors.