Private Placement Programs (PPP)

Background

• The “United States Department of the Treasury” (US Treasury), fulfilling its responsibilities under the Bretton Woods Agreements, developed the Medium-Term Note (MTN), as a bank instrument, 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.
• In the post-World War II era, the US Treasury and its affiliates adopted the protocols of the finance syndicates led by major European bank holding companies that would issue their Medium-Term Notes guaranteed by a matching US Treasury Guarantee.
• 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 both credit and cash infusions to survive and grow.
• While this understanding or intent remains true today, it is no longer a necessary requirement for involvement in such initiatives.
• Credit is created when the US Treasury, or its European equivalent, the European Central Bank (ECB), can either make available to or de facto authorize those Bank Instruments, at a discount (Primary Market Issue), to approved and pre-qualified Private Placement Depositors with qualifying funds on deposit, known here as “Asset Providers”.
• Such contracts to purchase and sell these trading instruments are managed and/or approved by the US Treasury 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 credit in the geographical location or the project(s) for which they have been approved.
• Not all Applicants or Projects are approved. Both the Applicant and the funds/assets that will be used to purchase and sell the financial instruments must be screened according to US Patriot Act and Anti-Money Laundering Guidelines and their European equivalents.
• The Asset Provider may be financing their own projects but all of the projects funded by the trade must be submitted and be subject to approval. When the earnings are generated they are deposited in a Distribution Account.
• Generally, there is just one Principal (or Asset Provider). That Principal is the owner of the Funds/Assets and the Principal is the Applicant to the “trade entity”, SFO or one of its partners, which must have the approval to do this trade from the US Treasury or the Federal Reserve.
• Essentially, this trading serves as a way to provide liquidity in many international banking centers and at the same time provide funds to achieve positive, nonpolitical financing of humanitarian projects throughout the world. Rather than define the specific trading which is essentially regular private trading of Bank Instruments or cash, however, the following, in this instance, is critical to understand:
• A fundamental part of this trading is that fresh capital is the base for these programs. The fresh capital does not have to be used for the trading because the Trade Vehicle will simply leverage this “secure capital” for as many as 10 to 15 times the value of the “secured capital”. This leverage is the fundamental basis for the quite handsome returns shown on our Projections since the actual trading is being conducted at a level many times the value of the “fresh capital”. Remember the “fresh capital” is secure since it is the leveraged capital with which the BUY/SELL is conducted. But FRESH CAPITAL has been a requirement since this trading was created after WWII.
• There are other factors creating profit, unique to this program, such as the Bank Guarantees (BGs), Standby Letters of Credit (SBLCs) and Medium-Term Notes (MTNs), to be used in the trading, that will generally have a discount available to the Trade and Asset Provider which adds to the profit line.
• These special trading programs were needed in Europe and Asia to:
• (a) rebuild and refinance after World War II; and, (b) establish stable economies. It would be helpful should you wish a deeper understanding of these trading programs to study the Bretton Woods Conference reports which began in 1944 to address the noted post war banking problems.

The Investment Opportunity

• This is a very low risk opportunity for an “investor” who can provide a cash deposit, Bank Guarantee (BG) or a Standby Letter of Credit (SBLC) for a minimum of One Hundred Million Euros (€100,000,000) or One Hundred Million Dollars ($100,000,000) this is for a Tier One Trading Program. (There is also an opportunity to participate in programs with funds from 10 Million up to 100 Million Euros to support getting up to Tier One Trading).
• This Bank Instrument (BI) or cash account allows the bank to provide credit facilities for the trading of MTNs. Returns to the investor (“Asset Provider”) are expected to be 6 % over a four-week period net of costs. This expectation is based on the track-record over the last decade.
• SFO has both cash and BI Trading Programs and can customize these for projects. SFO can support one or more Private Trade Programs per Investor/Asset Provider. SFO forms a joint-venture with the Investor/Asset Provider bringing the necessary links both to the banks and the trading community.
• SFO’s vital role in the process is noted below.
• Structure of the Venture: The Joint Venture Agreement is an Agreement between SFO and the Investor/Asset Provider to structure, manage and trade bank instruments using the collateralization of the Asset.
• SFO has established and assembled its own key professionals and professional firms who appraise, underwrite, and perform various services and functions of which are referred to as Asset Management,
• Financial Consulting, Asset Monetization, and Trading for the benefit of the Parties entering into one or more Private Placement Transaction
• Investment Opportunities using the Assets provided by the Investor/Asset Provider for their mutual benefit and which will facilitate the signing of a Buy/Sell Contract or Financial Agreement involving the engagement of the Assets, and the profitable buying and selling of negotiable bank and/or valuable instruments using funds or credit obtained from the collateralization of the Assets.
• The Agreements to be executed will provide that the Net Income that will be shared on a pre-defined basis between the Asset Provider and SFO reflecting each individual transaction. These required Agreements will clearly define the protocols that will guarantee non-depletion of the cash or Asset and 100% transparency of each trade program. SFO will also make sure that the funds are actively engaged in qualifying purposes.
• SFO will of course assist in arranging whatever banking and company requirements that the Asset Provider will require.

How Private Trading Works:

• Private placement traders operate against non-depleting, tradeable lines-of-credit or “blocked” cash accounts established on behalf of the Asset Provider/investor.
• The Trader's lines-of-credit (regardless of whether a BI or blocked cash is provided) are derived from prime banks that offer credit facilities to them.
• These credit-issuing banks, however, are governed by the Basil 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.
• Here the collateral is the BI or the cash account. SFO through its FED registered traders have well-established relationships with a number of prime banks. This is the acid test of a trade program's viability. The controlling variable is whether or not the trade group's procedures satisfy the credit-issuing bank's "care, custody and control" standard for activating Credit Lines—the "control test”.
• Additionally, successful trade programs, besides having unique access to established bank lines-of credit, require the expertise of qualified traders capable of engaging in the purchase and sale of investment-grade bank debentures in the wholesale market. Traders are generally licensed by both FED & European regulatory agencies and such trades proceed according to strict procedural and legal guidelines (vetted by SFO).
• Under present rules, traders cannot use their own assets to trade. 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.
• Hence, each and every completed trade will result in a net gain (and never a net loss) to the trader.

The following procedural protocol is normally followed:

• The investor’s funds or assets are never touched (blocking and verification only).
• Targeted 30% yield per tranche to clients (maximum allowable by authorities).
• Multiple tranches a week - with settlements on Friday – there may be multiple trades on a given day.
• No Powers of Attorney allowed, Principles Only!
• No surprises (the Investor/Asset Provider is a Signatory on the 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 subject to lien.

Reasons for Superior Returns

• There are three variables that work together to generate the high yields that characterize PPP trades.
• The three variables are velocity, leverage and compounding. The speed with which deals happen makes a massive difference to the overall annual return.
• The trading platform utilizes all three concepts within a unique financial environment in a Top 25 bank to create an incredibly powerful vehicle that can generate exceptional returns with no risk to the investment capital.

Procedures For Investment In a Trade Program 

• Bring to SFO a Know Your Client (KYC) Package and a verifiable Bank Ready Willing and Able Letter (RWA) addressed to the Account Signatory which RWA states simply that the Bank is ready to issue, a cash block or a SBLC/BG/DRAFT per the instructions of the Account Signatory. NO RISK in this action.
• SFO has the Investor/Asset Provider and the RWA verified and validated. NO RISK in this action.
• SFO has the Investor/Asset Provider complete the Joint Venture with SFO thus outlining this relationship. NO RISK in this action.
• SFO will then take the package into the second stage of compliance and plan & organize the trade with our traders/trade partners. NO RISK in this action.
• Contract is generated. (Monetizing and/or Trade) and issued.
• Once contract is returned authorized by Investor/Asset Provider, he must implement his side as agreed in contract.
• SFO makes sure income is distributed per Agreement. There will be full transparency of the income accounts; and, (B) if the Investor/Asset Provider decides to allow the withdrawal of some funds from the initial loan proceeds to cover expenses.
• Finally, this program and participation in it has always been carefully controlled. The participants need to be “clean” and generally exists a belief, by the Compliance Officers, that the Asset Provider will use their income from this program for the benefit of humanity. An acceptable benefit is not just humanitarian efforts but also those actions that create employment and advance the general quality of life on this planet – for profit and not for profit.