Qualified Institutional Buyer - QIB

DEFINITION of 'Qualified Institutional Buyer - QIB'

A corporate entity that falls within the "accredited investor" category, defined in SEC Rule 501 of Regulation D. A Qualified Institutional Buyer (QIB) is one that owns and invests, on a discretionary basis, at least $100 million in securities; for a broker-dealer the threshold is $10 million. QIBs encompass a wide range of entities, including banks, savings and loans associations, insurance companies, investment companies, employee benefit plans or entities owned entirely by accredited investors. Banks and S&L associations must also have a net worth of at least $25 million to satisfy the QIB criteria.

BREAKING DOWN 'Qualified Institutional Buyer - QIB'

QIBs must be either domestic or foreign institutions. Individuals are not permitted to be QIBs, regardless of their level of wealth or financial sophistication.

QIBs are permitted to participate in the market for securities under Rule 144A, which is a safe harbor exemption from the SEC's registration requirements for securities. Transactions generally conducted under Rule 144A include: private placements of debt or preferred securities by public issuers, offerings by foreign issuers who wish to avoid U.S. reporting requirements, and common stock offerings by non-reporting issuers.

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