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A qualified institutional buyer (QIB) is a category of investor that is thought to be competent and experienced enough to take part in specific securities offerings that are exempt from registration under the Securities Act of 1933. Institutional investors included under the concept of a QIB include, among others, banks, trusts of particular types, insurance and investment firms, and employee benefit plans.Â
QIBs must satisfy specific requirements set forth by the SEC in order to be eligible for this status, including those relating to the size of their investment portfolio, assets managed, or net worth.
One advantage of being a QIB is having access to private placements of securities that aren't SEC-registered, including those carried out in accordance with Rule 144A. As opposed to publicly traded securities, these offers, which are often solely accessible to institutional investors, including QIBs, can provide better yields. The absence of regulatory control and transparency, however, may potentially make them riskier.
QIBs are often subject to restrictions on their capacity to sell the securities they acquire in these offerings and are required to submit documents to the issuer of the securities to prove their QIB status. These limitations are intended to prevent the securities from being sold again to investors who do not satisfy the QIB requirements, as doing so could expose such investors to risks that they are not equipped to bear.
One advantage of being a QIB is having access to private placements of securities that aren't SEC-registered, including those carried out in accordance with Rule 144A. As opposed to publicly traded securities, these offers, which are often solely accessible to institutional investors, including QIBs, can provide better yields. The absence of regulatory control and transparency, however, may potentially make them riskier.
QIBs are often subject to restrictions on their capacity to sell the securities they acquire in these offerings and are required to submit documents to the issuer of the securities to prove their QIB status. These limitations are intended to prevent the securities from being sold again to investors who do not satisfy the QIB requirements, as doing so could expose such investors to risks that they are not equipped to bear.
