Accredited Investor vs. Qualified Purchaser

"Accredited investor" and "qualified purchaser" are two distinct investor-qualification standards in U.S. securities law, and the difference determines which private offerings a person can access. An accredited investor, defined in Rule 501 of Regulation D, is an individual with earned income exceeding $200,000 (or $300,000 with a spouse) in each of the prior two years with the expectation of the same, or a net worth over $1 million excluding the primary residence, or certain professionals holding qualifying licenses (Series 7, 65, or 82). Most real estate private placements, including Delaware Statutory Trusts, Opportunity Zone funds, and many private REITs, are sold under Regulation D to accredited investors. A qualified purchaser is a substantially higher bar, defined in Section 2(a)(51) of the Investment Company Act of 1940, generally requiring an individual to own at least $5 million in investments (or an entity to own or manage at least $25 million). The qualified-purchaser standard matters for funds relying on the Section 3(c)(7) exclusion from registration as an investment company, which allows an unlimited number of investors but only if all of them are qualified purchasers, versus the 3(c)(1) exclusion, which permits accredited investors but caps the number of holders. In short, all qualified purchasers are accredited, but very few accredited investors are qualified purchasers; the higher standard opens access to a narrower set of larger or institutional-style funds. Verification requirements also differ, particularly under Rule 506(c) offerings.