THE HOUSE OF SEKHON - YOUR PARTNER IN CAPITAL ASSETS CREATION. USING FREE MARKETS TO CREATE A RICHER, FREER, HAPPIER WORLD !!!!!

Private Placement Programs (PPP)

 

  • Clients who possess $100 million or more parked in any top commercial bank with AAA rating, might qualify to place funds into a Private Placement Program (PPP). Although you must be invited to join any PPP, these lucrative programs offer a safe and secure means of multiplying your wealth.
  • This opportunity has the potential for wealth creation and life quality enhancement. You might soon be enjoying the benefit and profit from this yielding investments. Applicants are expected to be experienced investors who are familiar with how these investments are done. The returns will be indicated to the fund owner by the trader in a Deed of Agreement.
  • Normally, DOA is issued after the due diligence process is complete. It is worth noting for the skeptical investors that their money is never transferred to another account. Investments of 100 million and above are blocked at fund owner’s bank through a standard MT 760 or MT 799.
  • Smaller investments of one million and less than 20 million are often desired to be transferred into a pool of investments located at a specific bank. But at different times of the year, Small Cap Programs for 1M to 10M are also available. It is up to the fund owner to decide if he is ready, willing and able to transfer his money to the designated bank account of the trader. Sometimes a SBLC from a top bank with a minimum face value of US$/Euro 20 million might be accepted to be put in trade program.

Private Placement Programs (PPP)“Managed Buy/Sell” or “Bank Trade” Program

Overview

  • The term “Private Placement” represents a category of investments that are not available on the open market. There exists as a special type of Private Placement Program (PPP) that is sometimes referred to as a Private Placement Investment Program, Private Placement Transaction Program, Private Placement Opportunity, Managed Buy/Sell Program, Fiduciary Trade, or more simply as a “Bank Trade”.
  • These involve bank trades that bring Bank Instruments from the Primary Market to the Secondary Market, usually Medium Term Notes (MTNs). 
  • Trading does not take place in the US, but occurs primarily in Europe (London, Zurich, Geneva) and Asia (Hong Kong, Singapore) among top-tier banks.
  • These are private and by invitation only. They are only available to Ultra High Net Worth Individuals or qualified Institutional Investors. They occur at the upper echelons of the world financial system and are not available to the general public. The returns are usually contractual double-digit monthly returns and the capital is not put at risk in the trading.
  • With properly structured programs, the Investor's capital never even leaves their own bank account. Trade proceeds are usually disbursed weekly, over a 40 week period (international banking weeks over 12 calendar months).
  • These are regulated by strict guidelines established by the Federal Reserve, European Central Bank, and the Bank of International Settlement (BIS) and both Traders and participating financial institutions require special licenses in order to participate.
  • Trade Platforms are middle-men organizations that facilitate non-typical transactions, put the contract in the Platform's name, and they split the profits with the Investor (usually 25% to 50%), thereby adding an element of risk and cost.
  • However, a cash investor with sufficient capital can bypass a Trade Platform and participate directly with the Trade Desk, receiving a contract on bank letterhead, with full banking responsibility. Intermediaries in the form of a Program Manager and a Facilitator serve to pre-qualify investors, answer their questions, and get all the necessary compliance documents.
  • Due diligence is undertaken by the Investor once they have the contract from the Trader stipulating the terms and procedures, on bank letterhead, with full banking responsibility. The serial number of that contract and the banking license of the Trader can easily be verified by the Investor's own banker.
  • After reviewing the contract and performing banker due diligence, the Investor then decides if they want to move forward or not.

Background

  • The “United States Department of the Treasury” (US Treasury), fulfilling its responsibilities under the Bretton Woods Agreement, developed the Medium Term Note (MTN) by employing established European financing methods through which banks and financial institutions commonly finance long-term loans by selling Letters of Credit or Bank Notes of medium term to provide funding for loans.
  • The MTN bank issues are debt instruments that are legally allowed to be excluded from the debit side of their ledger or "off-balance sheet", but count towards the banks capital reserves. Funds received by issuing these instruments rank at equal rate with depositors accounts, but these are long-term“contractual obligations” and as such are allowed to be listed in the footnotes instead of on the balance sheet.
  • In simple terms, the bank deposits the net proceeds of the newly issued MTN into the bank's asset or credit side of its ledger without any offsetting debit. As banks have the ability to borrow funds on a leveraged ratio against their capital reserves, in order to engage in fractional reserve lending, this method of financing can be very profitable.
  • In the post-World War II era, the Bretton Woods Agreement created a stable international financial system and to finance macroeconomic projects to re-build parts of Asia and Western Europe. The US Treasury and the “Federal Reserve System” (Federal Reserve) developed an instrument that may be traded to create new credit and that credit would be used in specific approved macroeconomic projects, allowing such funds and credit to be applied in geographical areas requiring credit and cash infusions to survive and grow.
  • While that understanding or intent remains true today, it is no longer always a necessary requirement to involve an economic project / humanitarian project. Investors can engage in wealth creation or project funding, depending on the client's goal and the terms of the trade program. The contracts to purchase and sell these trading instruments are managed and/or approved by the USTreasury, which are administered by prime US and European bank syndicates.
  • The US Treasury or the Federal Reserve may price these instruments at whatever price is necessary to provide the needed new credit in the geographical location or for the project(s) for which they have been approved. Not all applicants or projects are approved. Both the applicant and the funds that will be used to purchase and sell the financial instruments must be screened according to US Patriot Act and Anti-Money Laundering (AML) Guidelines and their European equivalents.
  • Generally, there is just one Principal (or Asset Provider). That Principal is the owner of the Funds and the Principal is the applicant to the “trade desk”, which must also have the approval to trade from the US Treasury or the Federal Reserve.
Nature of the Investment
  • These programs are a very low-risk opportunity for an “Investor” who can provide a cash deposit, BankGuarantee (BG) or a Standby Letter of Credit (SBLC) for a minimum of 100 Million USD/Euro($/€100,000,000). This deposit or Bank Instrument (BI) allows the trade bank to release credit facilities for the trading of MTNs.
  • The notional returns to the Investor/Asset Provider are expected to be over 20% per month.This expectation is based on the track-record over the last decade. However, returns are contractually agreed upon by the Asset Provider and the Trader before the trading begins, and can vary on a case-by-case basis.
  • For Investors who do not have 100M  there is the possibility to do a wealth-accumulation “bullet trade”. These are for Investors with a minimum of 10M USD/Euro, and the trade proceeds are paid in one lump sum (usually 7 days to 30 days), in order to help the investor get to the 100M USD/Euro level more quickly.
  • The Investor's capital is not put at risk in the trading. The Investor's capital is used to trigger a credit line. The credit line is fully underwritten before it can be triggered. The investor's capital is not physically involved (prohibited use) with the buy and re-sale exchange activities generating the profit.
  • Private Placement capital always sits in their own back account, without liability of lien, encumbrance, transfer of control or subject to first call by anyone, and only serves as a security pledge under contract to a trader.
  • The trader uses this pledge to trigger his own credit facility under contract with his trade bank, which extends a conditional leveraged credit line against the sum total of his Private Placement capital contracts with Investors.
  • The bank protects the Investors account from call in that the credit facility used for the purchase of securities is subject to bank responsible confirmation of a "closed book" sale only. The trader must have confirmed evidence of contracts with exit buyers (closed book) for the securities before the bank will release the credit line. The sale itself is managed and scrutinized by the bank at all times, as their funds and license are exposed.
  • In other words, the investor's funds are not directly involved in the buy/re-sale transactions. The Investor's cash deposit, as a security commitment, is non-callable and not subject to loss liability because of the terms and conditions of the credit line facility in which the transaction re-sale funds are in place prior to release of the credit line.

How it Works

  • The prime banks that offer credit facilities are governed by the Basel II and Basel III Accords, which became effective in September 2006 and January 2010, respectively, which impose strict requirements on bank lending and borrowing. Most notably, a bank’s credit lines must be "capitalized" by an acceptable form of collateral (of sufficient value) held "in the care, custody and control" of the credit issuing facility.
  • The collateral is the Investor's cash deposit or BI. Successful trade programs, besides having unique access to established bank lines-of-credit, require the expertise of qualified licensed traders capable of engaging in the purchase and sale of investment-grade bank debentures in the wholesale market.
  • Traders are licensed by American / European regulatory agencies, and trades proceed according to strict procedural and legal guidelines. Under present rules, traders cannot use their own assets to trade. This is why third-party investors are necessary. This trading operation is generally referred to as a "controlled", "managed", “closed” bank debenture trading effort because the Supply Side of the financial instruments and the Exit Buyer for the financial instruments have already been pre-arranged and the price of the instruments already established.
  • In other words, the licensed traders contractually manage the buy and the re-sale of the financial instruments before any trading actually takes place, thus the term, “Managed Buy/Sell”. Therefore, each and every completed trade will result in a net gain (and never a net loss) to the trader.
  • The following procedural protocol are normally be followed:
    • The investor’s funds are never touched (funds verification only).
    • Targeted 30% yield per tranche to clients (maximum allowable by authorities).
    • Four tranches a week - with settlements on Friday – there may be multiple trades on a given day.
    • No Powers of Attorney.
    • No surprises (the Investor/Asset Provider is be a Signatory to the Buy-Sell Trading Contract).
  • The crucial distinction, however, is that under a properly managed “buy-sell” transaction the Investor does NOT transfer any funds to an intermediary trader, nor are the funds required to be pledged or subjected to a lien.
  • When moving a MTN into the secondary market, through trading,
    • Master Commitment Holders are first in line.
    • Commitment Holders are second in line.
    • The secondary market comes after that.
  • A newly issued or “fresh cut” instrument is issued by a bank at a steep discount to face value, for example 58% of face value. It can only be purchased by a Fed authorized Master Commitment Holder, who has a certain quota they have to fill annually in order to keep their Fed appointment.
  • They line up a number of Commitment Holders who have the exclusive right to purchase these MTNs from the Master Commitment Holders, each in smaller volume and at a slight markup. This is the popular business model of “buy wholesale, sell retail”... buy wholesale in bulk, then sell in smaller quantities at a higher price.
  • These Commitment Holders can then sell it as a live seasoned instrument, into the secondary market, at 98.5% of face value. The spreads can be HUGE. They get contractual commitments from the exit buyers before the initial fresh-cut transaction with the Master Commitment Holder is ever triggered.It is all done digitally... authentication, verification, invoicing and close-out can be done in seconds, using Reuters or Bloomberg.
  • Again, BIS regulation is that banks cannot sell their authorized issues to each other, which is where the third-party Investor comes in. The Investor is the key for the trader to unlock the credit line from the trade bank.The traders who do these trades use credit lines from banks, but the credit line has to be fully underwritten before it can be triggered.
  • In other words, the trader must have confirmed evidence of contracts with exit buyers for the MTNs, what they call a “closed book” before the bank will release the credit line. This is risk-free arbitrage... the simultaneous purchase and sale of the exact same asset, at the exact same time, but at different prices.
  • A $100MM deposit supported by humanitarian project funding can gross 40% per day and net 30% per day to the account, after invoicing, clearing, and bank fees. The trader keeps a large percentage of that profit and shares the rest with the investor, based upon their contractual agreement. Payouts are usually weekly. Returns are contractually agreed upon by the trader and the Investor, based upon what paper issues he has lined up, and it is usually listed as a minimum or as a “best efforts”basis.
  • Facilitators can only state “notional returns of 20% per month” and must let the trader disclose to the Investor if it ends up being higher, something as high as 100% per week. Facilitators are not allowed to specify returns, as that is privately contracted between the trade and the Investor, after the Investor passes AML compliance.
  • Because of the high returns, investors with large sums will eventually be required to donate around 80% of their profits to an economic project (can be as low as 40% or as high as 95%), as non-recourse project funding.The Federal Reserve requires an accounting of those project funds so that they are released only against certified invoice by the accounting entity.

Risks and Risk Management

  • There should be no material risks to the cash deposit or BI, given that the absolute priority is the preservation of its value and that the BI remains under the control of the Investor at all times. Since the cash deposit or BI is required to be a top 25 bank, there is nominal Financial Institution risk, should there be a bank bail-in.
  • However, these trade programs only occur among top 25 banks with AAA credit ratings, which is better than the US Federal Government, and the US Treasury is considered to be the “risk-free rate”.

Investor Funds

  • Funds have to be of commercial origin, free of any liens or encumbrances. During the term of the Bank Trade, there cannot be any withdrawal of funds from the Client Account, nor shall any loans, credit lines, pledges, hypothecations, liens or encumbrances be placed against it.
  • The cost of doing business is the opportunity cost of that capital just sitting there, not being deployed into other investments. Institutional investors such as U.S. pension funds are prohibited under ERISA from purchasing anything that is not on screen, anything other than live MTNs or registered securities which are screenable.
  • A fresh-cut MTN can only become live or seasoned after its title changes, and it receives a ISIN or CUSIP number, and it is registered for screening on Bloomberg or Reuters. MTNs pay much higher yields than US treasuries, a 10 yr MTN can pay 7% to 8% whereas the 10 yr treasury is only around 2% to 3%, and the MTNs from the top banks have AAA credit rating, unlike the downgraded credit rating of the US treasuries.
  • The secondary market is dominated by institutional buyers, like pensions funds, sovereigns, and foundations, who buy-and-hold until maturity while collecting their annual coupon interest. They have to match cash outflows with cash inflows, and this is a reliable way for them to be able to do that, without the volatility of market speculation in equity markets. These are part of their conservative allocation, while equities and private equity funds are part of their riskier higher-yield allocations.

Why do banks issue MTNs?

  • Banks issue MTNs because they can leverage the funds received 10:1 and loan it out at interest for 10years, turning a hefty profit. Below is an illustrative example...
    • 1: Full Face Value of MTN Issue (FFV): 10 Billion Euro
    • 2: Sell at 58% of Face Value: 5.8 Billion Euro
    • 3: Coupon value at 7.5% per annum: 7.5 Billion Euro
    • 4: Liability (Point 2-{1+3}): -11.7 Billion Euro
    • 5: Leverage at 10:1: 58 Billion Euro
    • 6: Interest by bank at 3% per annum on Point 6: 17.4 Billion Euro
    • 7: Profit made by Bank (Point 4+6): 5.7 Billion Euro

Costs

  • The Asset Provider is not required to make any upfront fee payments. Because these are Private Placement Programs, by invitation only, under strict non-solicitation rules, it is customary to have facilitating intermediaries involved in the introduction. Those intermediaries are compensated with a small referral fee (usually 1% to 2%) paid out of the trading profits by the Paymaster, before net profits are distributed to the Asset Provider.

Procedures

  • Potential Investors/Asset Providers must first submit a Client Information Summary (CIS) and Proof ofFunds (Tear Sheet, Bank Statement, or Bank Letter) to the Facilitator and Program Manager, in order to pass AML compliance.
  • None of the customary standards and practices that apply to normal, conventional business, investing and finance applies to private funding programs.
  • It is a "privilege" to be invited to participate in a Private Placement Program, not a "right." The trading administrators and managers have a virtually endless supply of financially qualified applicants. Program Managers and their banks will favor the applicant who provides the best paperwork.
  • An applicant should never underestimate what the trading entities knowledge about them. Failure to provide full disclosure will disqualify the disingenuous. Clients must first prove that they are qualified, not the other way around.
  • Until the client is accepted by Compliance, the Traders, and Trading Banks, no placement can occur. The U.S. Patriot Act has introduced obligatory compliance procedures.
  • Program Managers are legally not allowed to discuss yield schedule nor contract terms until AFTER a potential Investor/Asset Provider has passed compliance, or else they could lose their license.
  • Corporations must empower an Officer or Director as sole, exclusive signatory by using a Corporate Resolution.
  • Not only do the funds have to be on deposit in an acceptable bank, they must also be in an acceptable jurisdiction.
  • Trading does not occur in the US, but funds can be in certain US banks with corresponding branches in Europe or Hong Kong (JP Morgan, HSBC, Barclays, RBS, etc).
  • It is felony fraud to submit documents or Financial Instruments that are forged, altered or counterfeit. Such documents are promptly referred to the appropriate law enforcement agencies for immediate criminal prosecution.
  • The practices, procedures and rules are determined by the U.S. FederalRegulatory Authorities, Western European Central Banks program management, licensed traders and trading banks.
  • It is their decision whom to accept and whom to reject. Contract terms, yield, schedules, etc., are made to fit their needs and schedules – and not the caprices or demands of the investors.
  • This marketplace is highly regulated and strictly confidential, and absolute confidentiality by the investor is a key element of every contract, with strict Non Disclosure Agreement that are enforced.
  • A client who breaks confidentiality will precipitate instant cancellation and may be required to repay profits received.
  • Finally, submission of the application documents to more than one management group at a time is termed "shopping".
  • If an investor "shops" he can expect that this fact shall be quickly disseminated and known among the program management groups who maintain close communication – and will then be accepted by none and rejected by all.

Private Placement Program Details and Procedure

  • Bank instruments (CD, MTN, BG, SBLCs, etc.) or liquid funds as CASH in any top bank are accepted by most PPP operatives.
  • Standard PPP begins with 100 million or more. Small Cap Programs accept one million and up – no top limit USD or Euros (cash or acceptable AA – AAA Rated collaterals)
  • Minimum requirement is 1 million and no top limit USD or Euro (cash or acceptable AA – AAA Rated bank instruments might be used as collateral) Small Cap Programs between 1M to 10M are rarely available.
  • Bank should preferably have swift capability. Any top Bank must issue Swift MT760 in favour of trader’s designated bank account
  • After completion of due diligence, the client’s bank holding the Cash funds or issuing the bank instrument must send a free message [Swift MT 199] to the trader’s designated bank confirming its readiness to either block funds or to issue a bank instrument.
  • Trader’s Bank will then reply to the client’s bank that it is ready, willing and able to receive the bank instrument [by Swift MT 199].
  • Deed of Agreement [DOA] is issued by the trader after both Banks had confirmed issuance and acceptance of the bank instrument.
  • Trading occurs for a 40-Week program or as Agreed by the Trader
  • Historical returns can be discussed directly with the Trader. For bank instruments with face value 100M or more, returns might be as high as 100 per cent a month shared 50:50 with the trader. But returns are never guaranteed. These are indicative historic figures. Actual returns might be lower or higher.
  • Face-to-face contract signing is very rare. All Signed documents are Emailed in PDF Format. This PPP opportunity is available to legitimate investors meeting the basic criteria as listed.
  • Once all documentation is delivered to the program manager the compliance process begins. At that point any and all due diligence will be completed for every applicant within a week. A week after the successful verification of cash funds or the respective bank instrument, the trade might begin. Profits might be paid to the investors weekly or monthly via wire transfers Swift MT103 into their designated Bank account.

Private Placement Programs/Trade Platforms

  • We are often contacted by project developers, investors, entrepreneurs and brokers who are looking to raise capital, or who are looking for investment opportunities that provide higher returns for themselves or their clients. This initial inquiry often leads to a discussion of private placement programs and trade platforms.

How Private Placement Programs Work

  • Many private placement programs and trade platforms are legitimate investment vehicles that are accessible to a wide variety of investors. Part of the confusion regarding private placement programs in particular is the term, “private placement”. Private placements are used by companies to raise capital from private investors often via a set of investment documents known as a Private Placement Memorandum (PPM).

Prime Bank Programs

  • More often than not, when people refer to PPPs they are referring to what are more properly known as Prime Bank Programs. Prime Bank Programs, also known as Prime Bank Investments, High Yield Investment Programs (HYIPs), Buy-Sell Programs or Roll Programs, are clearly and universally fraudulent.
  • They purport to involve the purchase and sale of medium-term notes (MTNs), Standby Letters of Credit (SBLCs), Bank Guarantees (BGs), or some similar instrument. As the name implies, it is usually alleged that only the largest top-50 prime banks in the world are involved in this program and participation is by invitation only.
  • There is usually a great deal of secrecy involved and the minimum investment is typically in excess of $100 million or more. Interestingly enough, prime bank programs in the US often state that only overseas banks are involved while overseas programs often state that only US banks are involved.
  • They are most often described as “risk-free” investments where one prime bank issues discounted instruments to a purchaser at another prime bank who has committed to purchase the notes at an agreed-upon price. If this is simply a bank-to-bank transaction one might wonder where the scam comes in.
  • Supposedly, the purchasing bank needs a large deposit from a new client to create the line of credit that will be used for the purchase. This deposit will be placed in a “blocked” account and held untouched by the bank until the transaction has been completed.
  • Prime bank programs have been universally condemned by the FBI, SEC and US Treasury Department as being fraudulent. In recent years, fraudsters have attempted to circumvent these governmental warnings with a clever ruse. They state that these agencies know that the programs are real, but that they are obligated to publicly deny their existence lest investors transfer large amounts of capital from deposit accounts into prime bank programs. Supposedly, this mass exodus of capital would cause the banking system to collapse, hence the official denials. This, of course, is complete nonsense.

Medium Term Notes (MTNs), Standby Letters of Credit (SBLCs) and Bank Guarantees (BGs)

  • Part of the reasons such frauds have been successful is that Medium Term Notes, Bank Guarantees and Standby Letters of Credit are real financial instruments.
  • A Medium Term Note is the general name given to a debt instrument that matures in the medium term, typically 5-10 years. Bank Guarantees, as they are known outside of the US, or their US counterpart, Standby Letters of Credit, are most often used in international commerce where a seller might be unsure about a buyer’s ability to pay for goods once received.
  • One way of overcoming this impasse is to utilize a bank guarantee or standby letter of credit. A SBLC or BG is simply a promise to pay on the part of the bank involved in the transaction.
  • Trading partners often have greater confidence in a transaction if the payment is backed by a commercial bank rather than a trading partner with whom they might be unfamiliar.
  • Banks are not in the business of losing depositors’ money, so in order for them to issue a SBLC or BG in the first place, they would underwrite the SBLC/BG similar to an unsecured loan–meaning obtaining an SBLC/BG is a difficult endeavour to begin with.
  • Moreover, banks will often charge 1%-8% of the face value of the instrument, meaning a $100 million SBLC could cost the bank’s client as much as $8 million to obtain, and is usually only valid for a period of one year. Which, of course, begs the question: if the borrower has sufficient standing with the bank to be approved for an SBLC/BG and sufficient funds to cover the cost of issuing it, why are they contacting us?
  • The answer is, if this were a legitimate transaction, they wouldn’t be. Over the years many people have approached us looking for SBLCs/BGs. Most are actually looking to LEASE an SBLC/BG and use the instrument as collateral for a loan or cash investment. This is somewhat akin to leasing a new car and then trying to use the car as collateral for a loan from another lender. No automobile, SBLC, BG or any other leased asset can be used as collateral in a legitimate financial transaction, which is why these transactions never work.

Steps for Applying to a Private Placement Program

  • The client provides a proof of funds and passport copy along with their compliance package. Most of the assets that people try to apply with CAN’T be used for any REAL private placement program. These include ITR’s (Irrevocable Trust Receipt), SKR’s (Safe Keeping Receipt), T Strips (Treasury Strips), junk bonds, asset backed bonds, hard assets, real estate, and more. As you can expect, most of the applications at this stage are unacceptable, and fraudulent.
  • Trade group submits application to the compliance department for review. Within hours, most real traders will know if the asset and owner are legitimate. Also at this time, the criminal background and origin of the funds are explored to ensure they are dealing with a clean applicant. In addition, if the client has over 100M, real trade groups typically either know of the applicant, or have seen the person try to apply before. There is a very small circle of real traders, so when someone applies with large assets, the word gets around rather fast.

  • Client passes due diligence, speaks with the trader, and receives the contract. Most clients have NEVER been involved with a legitimate private placement before. With that being said, many will show the contract to their attorneys, who have never been through this as well, and they may advise against proceeding due to a lack of familiarity. Needless to say, this can kill the deal, or may make the PPP investor feel uncomfortable. The problem you will run into over and over at this stage is transparency, and gaining trust from the client. due to the private nature of the private placement business, there is only so much information the trader can reveal, and this is a common obstacle.

  • Client signs the contract, and then the trader countersigns it to make it official. Once the client signs the contract, there are still a number of potential obstacles before you can “close the deal”. If a client signs the contract and does not complete the transaction, they may be reported to the authorities, and by doing so, they will be permanently prevented from participating in any private placement program in the future. As we said before, there is a small circle of real traders, and if they label a potential client as a non-performer, it is rare that any other REAL trader will spend their time to work with them.

  • Client contacts their bank to complete the private placement transaction. Banks are in the business of making money, and customer requests are secondary to the profit of the bank. When a client asks to block, conditionally assign, or transfer their funds, they are cutting into the pockets of the bank, which we know they don’t stand for. If the bank loses that asset off their books, they actually lose over 25x that amount in potential loans from their country’s central bank (FED/ECB). With this in mind, most banks stall with excuses, since that will frustrate most customers enough to kill the transaction. Even though this may be an obstacle, this should never be a deal killer since it is the client’s money, not the banks. To complete a deal, you either need a bull personality or a great relationship with the bank, otherwise you may encounter problems with the final steps.

  • Client’s funds are blocked, conditionally assigned, or transferred to the trade group in accordance with the contract. Very few trade groups request that the client transfers ownership of their assets. If they do request this, be very cautious, and expect something is not as it seems. Most private placement traders ONLY need a conditional assignment of assets, temporary beneficiary access, or the blocking of the assets in their favor for the period of the trade. This allows them to access a line of credit which they trade for the client, specific to their contract agreement. Also, so you know, PING programs are 99.9% fake, since they do not allow the trader to access the line of credit they need to start trading. No bank will loan without collateral, and since “PINGING” the account is not sufficient assurance to the bank that is has collateral in place, it never works. It is just another ignorant broker creation and is most often part of a bait and switch strategy.

  • Trader accesses the line of credit from the trading bank. The trader is the only one who can access a line of credit against blocked assets. No one who is trying to complete a scam will ever be able to draw a huge line of credit on blocked assets. The bank completes thorough due diligence on anyone it loans to, and when that loan involves millions of dollars, it is far more diligent. In short, no bank will offer a line of credit for millions to someone who they do not thoroughly trust, so there is not a lot of worry about when blocking assets in someone’s favour.

  • Trader uses line of credit to have discounted bank instruments issued from bank. First, the issuing bank sells the instrument directly to the trader for a significant discount (ex. 60% of face value). After the trader buys the instrument, they then sell it to the commitment holder/exit buyer (ex. 66% of face), who then sells it to their commitment holder for a higher price (72% of face). This continues until someone purchases it with the intent to hold the note to collect the coupon/interest, and the difference between the discounted note and its value at maturity. This is the basic idea of how profit is generated in Private Placement Programs that use bank instruments.

  • Client receives payment of profits weekly or according to the contract. Once everything it set up with the banking, it is a very smooth process to get continual profits into your account. Typically, the first payment is made within 10-15 banking days after trading has started so they can ramp up the account to purchase larger notes. After the first payment, the client will receive disbursements on a weekly basis, or whatever their contract specifies. Most clients and brokers would be best served in setting up international bank accounts, or better yet, they can have an account at the bank where the trading is occurring. This will prevent the need to send external wires through different countries and banking systems. All profits would be internally transferred “ledger to ledger”, and would not attract as much attention.

  • Client uses profits to fund projects and retains the rest for personal use. Most real private placement programs are intended to fund humanitarian projects in underdeveloped nations. Typically, 60-70% of the program’s profits must go to projects, while the remaining 30-40% is for “administrative use”. In essence, the 30-40% can be used at the client’s discretion, but you must make sure you are funding projects as well. The platform does not regulate this, but the FEB oversees all of the companies who have applied and received money in these types of programs.

  • Once the client completes this 40 week trading process, they can re-enter, but they must have projects funnel the profits into. Most private placement contracts are for 2 years, and are renewed upon expiration if both parties choose.

Liquid error (layout/theme line 205): Could not find asset snippets/jsonld-for-seo.liquid
Subscribe