What is a requirement for someone to be classified as a Qualified Institutional Buyer?

For someone to be classified as a Qualified Institutional Buyer (QIB), it is essential that they control a discretionary securities portfolio of at least $100 million. This definition is set forth by the Securities and Exchange Commission (SEC) under Rule 144A, which outlines the criteria for entities to qualify for certain exemptions from registration requirements for securities.

The rationale behind this requirement is that QIBs are expected to have the financial sophistication and ability to evaluate investment risks adequately, as well as the financial resources to absorb potential losses. By controlling a significant amount of assets, these buyers demonstrate the capability to handle complex investment decisions.

The requirement regarding the discretionary portfolio ensures that these entities can make independent investment decisions based on their financial strategies rather than relying on third-party management, further confirming their sophistication in the securities markets.

The other options do not accurately reflect the criteria necessary for QIB classification, highlighting that the distinction lies strongly in asset control and financial expertise rather than just financial history or sector operation.