Common Investor Eligibility Definitions

Accredited Investor

Securities Act of 1933 — Regulation D, Rule 501(a)

The Accredited Investor definition includes a number of individuals and institutions that meet specified financial, professional or regulatory criteria. Common qualifying categories include:

Individuals

• A natural person with individual net worth, or joint net worth with a spouse or spousal equivalent, in excess of $1,000,000. The value of the person's primary residence is generally excluded from the calculation, subject to specific rules concerning debt secured by the residence.
• A natural person with individual income in excess of $200,000 in each of the two most recent years, or joint income with a spouse or spousal equivalent in excess of $300,000 in each of those years, with a reasonable expectation of reaching the same income level in the current year.
• A natural person who holds in good standing a professional certification, designation or credential that the SEC has designated as qualifying. The SEC currently recognizes the Series 7, Series 65 and Series 82 licenses.
• A "knowledgeable employee" of a qualifying private fund, for investments in that private fund and certain other private funds managed by the same affiliated adviser, as provided by the applicable SEC rules.

Entities and Institutions

• Certain regulated financial institutions, including qualifying banks, registered broker-dealers, registered or qualifying investment advisers, insurance companies, registered investment companies, business development companies, Small Business Investment Companies and Rural Business Investment Companies.
• Certain employee benefit plans meeting the conditions of Rule 501(a), including plans with total assets in excess of $5,000,000 or plans whose investment decision is made by a qualifying fiduciary.
• Corporations, partnerships, limited liability companies, certain tax-exempt organizations and other qualifying entities with total assets in excess of $5,000,000 that were not formed for the specific purpose of acquiring the offered investment.
• Trusts with total assets in excess of $5,000,000 that were not formed for the specific purpose of acquiring the offered investment and whose investment decision is directed by a person capable of evaluating the merits and risks of the investment.
• An entity of a type not otherwise specifically listed in Rule 501(a), not formed for the specific purpose of acquiring the offered investment, that owns more than $5,000,000 in investments.
• A qualifying family office with more than $5,000,000 in assets under management, and certain family clients of such a family office, subject to the conditions in Rule 501(a).
• An entity in which all of the equity owners are Accredited Investors.

Official reference: U.S. Securities and Exchange Commission — Accredited Investor Definition

Qualified Eligible Person ("QEP")

Commodity Futures Trading Commission — Regulation 4.7

A Qualified Eligible Person is defined under CFTC Regulation 4.7 for purposes of certain commodity pool and commodity trading advisory programs. The QEP definition contains multiple categories and is broader than a single net-worth or asset test.

Regulation 4.7 generally separates QEPs into two groups: certain persons and institutions that may qualify without satisfying the additional Portfolio Requirement, and other persons who must satisfy the Portfolio Requirement in addition to meeting an applicable eligibility category.

For example, certain natural persons who rely on Accredited Investor status as part of their QEP eligibility must also satisfy the CFTC Portfolio Requirement. Regulation 4.7 also contains categories for certain regulated financial professionals, institutions and other qualifying persons that may qualify without the additional Portfolio Requirement.

The QEP definition contains numerous additional categories, conditions and special rules. A person may qualify as an Accredited Investor and still not qualify as a QEP.

Official references: 17 CFR § 4.7  |  CFTC Final Rule Updating the QEP Portfolio Requirement

Eligible Contract Participant ("ECP")

Commodity Exchange Act — Section 1a(18); CFTC Regulation 1.3

Eligible Contract Participant is a separate status under the Commodity Exchange Act. ECP status can be relevant to certain commodity-interest, foreign-exchange and swap transactions and account structures. It is not the same test as Accredited Investor or Qualified Eligible Person status.

The statutory definition contains numerous categories. Common examples include:

• Certain regulated financial institutions, insurance companies, investment companies and comparable qualifying foreign entities.
• A qualifying commodity pool with total assets exceeding $5,000,000 that is formed and operated by a person subject to applicable commodity regulation, subject to additional rules for certain transactions.
• A corporation, partnership, proprietorship, organization, trust or other entity with total assets exceeding $10,000,000, as well as certain other entities that qualify through specified guarantees, support arrangements or commercial-risk provisions.
• Certain employee benefit plans, governmental plans and other institutional entities that satisfy the conditions in the Commodity Exchange Act.
• An individual with amounts invested on a discretionary basis in excess of $10,000,000; or in excess of $5,000,000 when entering into the applicable transaction to manage risk associated with an asset owned or liability incurred, or reasonably likely to be owned or incurred, by the individual.
• Certain futures commission merchants, floor brokers, floor traders and other persons specifically included in the statutory definition, subject to the conditions applicable to those categories.

The ECP definition is detailed and includes transaction-specific conditions and special rules for commodity pools and other entities. The statutory and regulatory text should be reviewed for any actual eligibility determination.

Official references: Commodity Exchange Act — Section 1a(18)  |  17 CFR § 1.3