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 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. An excellent white paper on private placement programs and trade platforms was written by MB Assets of Memphis, TN–a copy of which is available for download above. It should be noted that we have no relationship with MB Assets or its principals—their white paper is provided for educational purposes only and should not be construed as an endorsement of the firm. 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.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506