Qualified purchaser.
In plain English
Qualified purchaser is a status defined in federal securities law and based on the size of a person's or institution's investment holdings, not on income or on tested knowledge. Funds that accept only qualified purchasers can rely on an exemption that lets them take an unlimited number of such investors while staying outside the registration rules that apply to public funds. The threshold amount is set by statute and rule, so the current figure should be confirmed with the issuing body rather than assumed. It is a higher bar than accredited investor status, which many more households meet. Clearing the bar removes investor protections rather than adding them.
01Why it matters
Meeting this definition means regulators treat you as able to absorb a total loss, so the disclosure and oversight you get from a registered fund no longer apply.
02The math, step by step
Say a fund is structured to accept only qualified purchasers. Two households approach it. One has a high salary but modest holdings and does not qualify. The other has a large portfolio and does. The fund can accept the second, and that household gives up the protections a registered fund would provide.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
Accredited investor status can be met through income or net worth and opens the door to many private offerings. Qualified purchaser is a separate, higher standard measured by investments held, and it opens a different exemption. Meeting one does not mean meeting the other.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
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