In many countries, the financial market regulator or securities commission makes a distinction between “regular” investors and “sophisticated” investors. The second group tends to be richer or more experienced investors who know more about the risks of investing in securities that aren’t listed and have less information about them. Because of how well they are doing financially, they are also better able to handle losses from riskier investments.
Retail investors, on the other hand, aren’t as smart and can’t handle losses as well, so the financial products they can buy are more tightly regulated. In the EU, investors with a lot of money are called “professional clients.” They are called “accredited investors” in the United States. Most of the time, the financial regulator sets up qualitative and/or quantitative tests to figure out who is a “sophisticated” investor.