Sophisticated investor
Sophisticated investor is a somewhat looser designation sometimes used in regulatory language. While accredited investor status is clearly defined, there are no official qualifications defining a sophisticated investor.
According to the SEC, a sophisticated investor is someone with “sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment.”
While the terms “accredited investor” and “sophisticated investor” are sometimes used interchangeably, accreditation status, not sophistication, is the common standard used to differentiate between participants in private investment offerings.
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