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Subject: Buy-Sell Arbitrage Transactions Date: 3/9/2009 2:51 PM
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The World of Private Placements
Synopsis

PPP is a general term used in the world of Private Placements, which refers to many different criteria. Private Placement trading programs that usually consist and involve trading with Medium Term Notes (MTN’s) or Treasury Bills (T-Bills).

These programs provide the traders with fresh issues of MTN’s or T-Bills that produce high profit margins. This is known as the first tier. In the commercial world, this would be called B2B wholesale market. Those familiar with this terminology know that end users usually do not have access to the prices offered in the wholesale market. This so being is why most associate directly with a Retailer and not directly with the Source.

PPP’s refer strictly to trading programs involved in the highest returns on investment. Many times, though not always, these programs require Investors to allocate a portion of the profits into a Humanitarian Development. This is usually in a social and/or economic developments resulting in a duality of not only achieved profits for the Investor, but profits allocated to humanitarian efforts as well. Nonetheless, even after the deduction of earnings allocated towards these efforts, the Investor is still left with, at minimum, double-digit monthly returns.

I. PRE-INTRODUCTION

Private Placement Opportunity Programs (PPOP), also known as Private Placement Programs (PPP), Private Placement Investment Programs (PPIP), as well as a few others acronyms, remain a tight-lipped “fraternity” that is offered by invitation only to a select few.

The following synopsis is a guide for those fortunate few who may be invited to participate within this “fraternity”.



II. TOPICS

Before speaking of PPOP opportunities, there is a need to question some basic fundamental criteria for the existence of this business. It is essential to understand the true meaning of currency.

A. What is currency?
B. How is currency created?
C. How can the demand for currency and credit be controlled?
D. What is the evolution of events escalating to a debt being issued (through a note) which is discounted, sold and then resold in an arbitrage transaction?

With these basic questions in the forefront of your mind, it will better help you understand the Essence of the PPOP’s.

The main reason affluent individuals and corporations may not have heard of these PPP programs is because they are difficult to find and not always available. No matter what may be heard uttered in the confines of offices there are few high-level traders who have access to these type programs. That being so, many of those traders refuse to any but their best clients to participate within this little know market and will vehemently deny that such programs exist.

There have been many capable Investors who have been trying to get into PPP’s for years and have been led astray by sending MT760’s to “banks and purported traders” only to find out that their time has been wasted and in some cases, funds even misappropriated because of traders who are not what they claim to be. Also, the market has seen “brokers” who do nothing but float these compliance packages in “trader space” and after months, and sometimes years of non-performance, Investors become dissuaded, believing that these programs do not exist. If you are not in a trade within a few weeks and realizing returns, you more than likely are in a quagmire of individuals who know not what they do.

Genuine programs have zero risk to the Investor. Funds should never be placed outside of an Investor’s control and should remain in a top ten tier bank. Any credit lines or leverage is raised by the capital underwritten by the Trading Platform. The Investor therefore is involved for the purpose of audit and verification of blocked funds. Due to stringent rules and regulations involving Private Placement Programs, financial institutions are not allowed to participate directly in these trades, thereby giving the opportunity for a private entity to have the ability to participate.

At no time are the Investor’s (hereupon referred to as Audit Fund Provider) used for any trade. Funds are no more than blocked for the allocated period of the trade.

Procedures are simple and transparent; however, the Audit Fund Provider adheres to strict compliance and disclosure. First contact is always a compliance officer who will lead the Investor through the submission stage and ascertain whether the Audit Fund Provider must be accepted into the program. The entity requesting admittance must have full control over the funds or instrument(s). Leased instruments or funds where the Audit Fund Provider does not control completely, and typically do not reach it through the compliance phase.





MAIN INDEX

I. INTRODUCTION

II. TOPICS

III. WHAT SUBSTANTIATES A PPOP

a. Money Creation
b. Large Debt Instruments Market
c. Normal Trading vs. Private Trading
d. Arbitrage and Leverage
e. High Yield
f. Investors
g. Programs’ Structure
h. Non-Solicitation and Non-Disclosure
i. How banks and brokers earn
j. Projects
k. Process Synthesis

IV. PROCESS SUMMARY

V. ANALYSIS OF RISK INVOLVED IN PPOP CONTRACTS

a. Investor’s Side
b. Broker’s and Intermediary’s Side


Trading Programs/Private Placements et al.


They were foremost conceptualized to “create money”. This holds true even on the more smaller scale conventional transactions. You lend out $1,000 looking for a return of $1,150 (US). You become a “debt instrument” at a 15% rate (interest only) for one year.

Money Creation

The banks of course do this everyday in the Billions of dollars. Set aside the “legalize” part, and it is the “creation” part, that is the cause. Banks are creating money where previously there was none.

“Private Placement Opportunity Programs” (PPOP’s) involves trading discounted bank issued debt instruments; the money is created because such instruments are differed payment obligations (debts). Hence, money is created by debts. So theoretically any person, entity, and/or organization can issue a debt note.

The commonality is that they are all differed payment liabilities. (Debt notes).

If one needs $100 and writes a debt note for $120 that matures after one year. Which he sells for $100 (discounting). Theoretically he is able to issue as many such debt notes at whatever face value he wants as long as there are those that he is strong enough financially to honor them upon maturity, thereby is the interest to buy such debt notes.

Scale this up to $1 million (US) and you have the opportunity to buy a debt note with the face value of $1 million by one of the largest banks in Weston Europe for lets say $800,000 (US). This being a debt note that matures in one year, assuming you could verify it wouldn’t you consider buying it? Of course if an XYZ Corp approached you to buy an identical note from an unknown bank, understandably you would decline. Herein is where there are distortions, frauds and the like that come from the few who grasp the concepts, but don’t truly adhere or understand them.


Large Debt Instrument Markets

Moving further up the scale and you have the Large Debt Instruments Market. This is where it becomes substantial. (MTN, BG, SBLC, Bonds, PN). These instruments enter into transactions involve issuing banks and long chains of exit buyers (Pension Funds, large financial institutions, and the list goes on) in a Private Placement arena.

These bank activities are done as “Off-Balance Sheet Activities” and as such benefits are realized in many ways. Off-Balance Sheet Activities are contingent assets and liabilities where calculations depend on the outcome upon which the claim is based. This is similar to that of an option. Off-Balance Sheet Activities appear on the balance sheet only as memoranda items.




Normal Trading VS Private Placement

All trading programs in the Private Placement arena involve trade with such debt notes in one way or another. To bypass the legal restrictions, this can only be done on a private level. This is the reason why this type of trading is so different from “normal” trading, which remains highly regulated. This business can be done and is restricted on a private level only (the Private Placement level). This private level is categorized as a special regulation without the usual strict restrictions present on the securities market.

The normal trading know by the public is the Open Market, also referred to as the Spot-Market. This is where discounted instruments are bought and sold with bids and offers very similar to an auction. For participation to occur the traders must be in full control of the funds, otherwise they cannot buy the instruments and sell them onward. There are no arbitrage buy-sell transactions in this market because all participants can see the instruments and the prices.

However, besides this Open Market, there is the Closed, Private Market where a restricted number of Master Commitment Holders (MCH) are the inner circle. These MCH are trusts with huge amounts of money that enter into contractual agreements with banks to buy certain number of fresh-cut instruments at a specific price during a specific amount of time. The MCH’s job is to continually sell these instruments by contracting sub-committee holders, who contract exit-buyers, to do this.

These “programs’ are all based on arbitrage buy-sell transactions with pre-defined prices, at prearranged sales and as such, the Traders never need to be in control of the Investor’s funds. The caveat, if it could ever be considered as one, is that no program can commence until there is enough currency behind the buy-sell transaction. This is where the investor’s are needed because the involved banks and commitment holders are not allowed to trade any currency unless they have reserved enough currency on the market. This is the initial currency, which is brought in by the investor, which is neither pulled out of the account or ever at risk, because the funds are never moved.

The involved (Trading Banks) can lend out money to the Traders at a typical leveraged amount Ten to One. During certain conditions, this can be as much as Twenty to One. So if the Trader can “reserve” $100M the leverage would be $1B. In reality the bank is giving the Trader a line of credit based on how much money the Trader and the Commitment Holder has secured in an account.

The following is where the headaches and malevolent sources can be squashed. When a trader says that he must be “in control” of the investor’s fund, be wary. The implications are that he is not one of the elite in the inner circle, but plays in the open-spot market. In this market lots of different “instruments” are traded. Bear in mind, this is much more different then when the trader only needs to reserve the investor’s funds, and doesn’t need to be in control of the funds. This is the true tight-lipped niche known as the Private Market.

Because plenty of bankers and other people in the financial world are well aware of the open market, as well as the “MTN programs”, they remain segregated from the private market, and find it hard to believe they exists. The individual who invites another to participate has an enormous responsibility to delegate with not only the principals, but also those who may bring one forth. The consequences are being blacklisted if the facts are not presented correctly.



ARBITRAGE AND LEVERAGE

The real core of the trading and its safety is due to the fact that the traders arrange the buy-sell transactions as arbitrage. This means that the instruments will be bought and sold at the same time with pre-defined prices. A chain of buyers and sellers are contracted, including the exit buyers who often are institutions, other banks, insurance companies, very large companies, or other wealthy individuals.

The issued instruments are never sold directly to the exit-buyer but to a chain of up to seven (occasionally up to fifty investors). The banks cannot, for obvious reasons, directly participate in this as “in-between” buyers and sellers. The banks are still profiting from this indirectly because they are lending money (with interest) to the trader, or to the investor as a line of credit. This is the leveraging aspect of this PPOP. Furthermore, the bank(s) profit from the commissions involved in each buy-sell transaction of debt bank instruments in the trading circle.

The true beauty of these platforms is that the investor(s) assets/currency doesn’t have to be used for the actual transactions and is only reserved as a compensating balance (mirrored) against the credit line. This credit line is then used to back up the arbitrage buy-sell transactions. Since the trading is done as arbitrage, the money (credit line) doesn’t have to be used, but it must still be available to back up every buy-sell transaction. Such programs never fail because they don’t start until all entities have been contracted, each entity knows what role to play and they understand how they will profit from the transactions.


The Real PPOP’s

Although this has been detailed already it needs to be pointed out for those who cannot grasp the security of this type of platform. It is such a critical aspect that it should be underlined again. A trader who is able to leverage is able to control a credit of typically ten to twenty times that of the principal. Although the trader is in control of the currency/asset, he is not able to spend the currency/asset, because he cannot move the currency/asset. The trader only needs to show that the funds are secure, that the trader is in control of the money, meaning that the money is not used somewhere else at the time of the buy-sell transaction. The money is never spent or moved. The reason again is that the trading is done as arbitrage transactions.


Example of how this works:

Buy-Sell Scenario:

Let’s say that you’re offered the chance to buy a commercial business for $5M. You also find another buyer who is willing to but it from you for $5.5m. If the buy-sell transactions are done at the same time, then you don’t have to spend the $5M waiting to sell the $5.5M. Since this is being done concurrently, your funds are not at risks and you immediately get $500,000 profit. The case needs to be pointed out though that you still need funds that are held in control for this to transpire.

Arbitrage Transactions with discounted bank instruments are done in a similar way. The involved Trader never spends said currency, though they remain in control of said currency. The Investor’s principal is reserved in order for the Trader to leverage (example: he is using a credit line that is ten to twenty times the principal, and is thereby able to trade ten to twenty times as much money).

Confusion runs rampant from ‘who’ is directly involved and Investor’s who were stifled with “half-truths’ from sources who were (are not) fully educated on PPOP’s. Many seem to believe the money must be spent or “moved”. Even though this is the way of traditional type trading and is also the common way to trade on the open market for securities and bank instruments, it’s possible to set up arbitrage transactions if there’s a chain of contracted buyers. It can be understood then why in these Private Placement Programs the Investor funds are always safe without any trading or other risks except for the normal bank system risks (which is so heavily regulated, mandated, and bailed out that it is an irrelevant point).

The World of High Yields

When compared with common yields of traditional investments, PPOP’s achieve much higher yields. Most organizations, Corporations and individuals do not believe that a yield of 50%-100% per week is possible. It is again a problem of the lack of knowledge (and the difficulty in obtaining either invitation or correct information) of these working programs that in fact do work and have been doing so for many years. This example may shed some light on the matter:

Assume a leverage effect of 10:1 (common place in the MTN market). Let’s say that the Investor has $100M, (this is the minimum that the Trader is able to work with). Lets then assume that the Trader is able to do one Buy-Sell Transaction per day, three days per week for 40 banking weeks, (this equates to a full calendar year), and that the profit is 5% in each Buy-Sell Transaction. That results in 5% x 3 = 15%. With the leverage effect the profit will be ten times as high, or 150% per week for the Investor. Before you start counting.

This return will be split between the Investor and the Trading Group (for projects) but the final net yield for the Investor will be a double-digit weekly yield. Bear in mind that the above example can still be seen as a conservative one because tier one level trading groups can get a much higher single spread for each transaction as well as a marked higher number of weekly trades. This greatly enhances the final yield.

It can be understood that such yields would seem unrealistically high, and that is more so when compared to traditional ways of investing and trading.

The involved Investor(s) and (The Program Investors) are not the end buyers in the chain. The real end- buyers are financially strong companies who are looking for safe investments (pension funds, trusts, insurance companies). Since these companies are need as end buyers they are not permitted to participate “in between” as Investors. The Investor who participates in a Private Placement Investment Program is just an individual entity in the picture among many other entities.


Breakdown of entity classifications:

Private Placement Opportunity Program

Bank Instruments~ Derived from Top World Banks
Trading Groups~ Traders-Commitment Holders-Facilitators
Investor~ Brings in the funds for the PPOP Program
Exit Buyers~ Pension Funds-Insurance Funds-Etc.

Investor dose not typically see all of the entities involved in the process because dealings are typically done through a “Head Broker” with introductions thereafter with the Facilitator, then the Platform and the Trader direct.




Programs Structure:

Usually a Trading Program is nothing more then a buy-sell transaction of discounted banking instruments made as an arbitrage transaction. An investor with sizable funds/assets (on the level of $100M to $5B US) could arrange for his own program by implementing the buy-sell transaction. This easier said then done for those who believe then can facilitate this procedure. The Investor would need to gain control of the whole process, making contact with the Provider Banks for the bank instruments and at the same time for the exit buyers. This is not a simple task at all considering that there are many federally mandated restrictions to be passed while at the same time it is difficult to get the strong necessary connections with the related parties (the issuing banks/providers for the bank instruments, and the exit buyers).

Investors, who understand time valuation and contract association relationships, realize the absurdity of being of being led by the wind. For an Investor, it is much simpler (and usually more profitable) to enter a program where the Trader with his Trading Group already has all aspects and criteria in place (the issuing banks, the exit buyers, the contracts ready for the arbitrage transaction, the line of credit with the trading banks, all of the necessary guarantees/safety for the investor, etc.) The Investor need only agree with the contract proposed by the Trader. With an aligned group, the Investor is further assured of a smooth flowing process when the Trader will meet the Investor directly (at the Investor/Trader request) to finalize the trade documents.

Yet another advantage for the Investor is the ability to enter the program with a substantially lower amount of money due to the indirect advantage the line of credit Trading Group has. This fact alone qualifies the platform above doing it on your own or working with those less informed.


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NON-SOLICITATION AND NON-DISCLOSURE

A direct consequence of the Private Placement environment is that the Non-Solicitation regulation must be followed by all of the involved parties. This factor strongly influences the way all entities can deal with each other along with the way they can make contact. Unfortunately this is capitalized upon in several instances where the Investor is lead into a fraudulent transaction. During the early stages of a PPIP?PPOP, it is frequently difficult to be able to determine if they are in fact in contact with a reliable source. Unless an Investor has an established relationship with his directives, it is wise to stay the course with the few who are already secured with viable platforms.

This is another reason why so few experienced Facilitators talk about these transactions. Virtually every contract invo9lving use f these high-yield instruments contains very explicit non-circumvention and non-disclosure clauses forbidding the contracting parties from discussing any aspect of the transaction for several years.
Subsequently it is very difficult to locate (come into contact) with experienced contacts who are both knowledgeable and willing to talk openly about this type of instrument, the profitability of the transactions and the relationships that have been built over time. These programs are exceptionally and deliberate tight closed doors; they are not advertised anywhere, they are do not covered in publications or media outlets. These programs cannot be open to anyone but the most well connected, and wealthy entities that can come forward with proven and substantial cash funds, period.


HOW DO BANKS AND FACILITATORS EARN?

Foremost, banks are not allowed to act as investors in such programs; however, they are able to profit from it indirectly in different ways. This permits some private entities (brokers, trading groups and private investors) to take part in this business that otherwise would be a banking matter only. The private assets/currency coming from private clients are necessary to start the process. These private large cash funds are the mandatory requirement for the buy sell transactions of banking debt instruments and as a consequence, also the mandatory requirement for the programs through the Trading Groups. Brokers/Intermediaries will predominantly be the gateway when introducing the Investor(s) to the Trading Groups. From this process, each of the involved entities is appropriately screened and take their part in sharing of the benefits. (These are the entitled commissions for the banks/brokers, and proceeds for the Trading Groups and Investors).


PROJECTS

Normally there will be an involvement with a particular Project, although, Projects are usually involved with these programs, it needs to be made clear that the purpose of this trading is not to finance Humanitarian Projects, (or other projects). While it is true those projects, (not just humanitarian projects) can be funded as a result of this trading, and that this type of trading generates extraordinary amounts of money on the market, it is imperative, and often insisted upon, that measure be taken to keep inflation low.


One of the main ways is to finance many different projects. While we are just touching the tip of the iceberg with the relations to inflation and all economic variances that support itself around this topic, essentially, when too much money is created the result is the treat of inflation. In order to continue creating debt, different measures must be taken to keep the inflation low. One way is to adjust the interest rates. For this kind of trading however, this is not possible; it has little or no effect. A better way is to let some of the profit be used for different projects that need funding, for instance to rebuild the infrastructure in regions of the world that have experienced catastrophes. This creates a huge economic stimulus, which among many other things creates jobs for people in those regions.

So the reason for project funding is not primarily to support humanitarian organizations, though that is an indirect benefit, but to fight against inflation.


PROCESS SYNTHESIS


The complete process of involving the issuing of debt notes, the arbitrage transactions, the programs, the projects and anything else that makes this a complete solution, is a result of combined market forces. Banks have a method of increasing their revenue and profits, Investors are able to finance different ventures, and borrowers are able to access loan funds. There is a supply and demand for such instruments, and as long as the supply and demand exists, then in turn so too will this kind of trading exists.




WHAT SUBSTANTIATES A PPOP

Following is a summary indicating the process involved to enter such a program:

A. Investor with $100M (U.S.) up to $5B (U.S.) can be an applicant for a Private Placement Opportunity Program.
B. This business is entirely private. To get access to these investment programs the Investor must send his preliminary documentation to the Facilitator who the Investor trusts to have direct contact(s) leading to the Trading Group. There is no other way for the Investor to get in direct contact with the Trading Group at this stage.
C. After the Investor has sent his own paperwork, the Trading Group will proceed with it’s Due Diligence phase on the applicant. When the diligence phase clears, then the Program Manager in the Trading Group will contact the Investor by phone and/or fax and invite the Investor to a face-to-face meeting. However, usually, if the Investor is not able or willing to travel, everything can be done via email, fax, phone and courier mail. If not cleared, then the Program Manager will contact the Facilitator/Broker and advise that the Investor did not qualify. Here is where we have seen on occasion the Investor discrediting the Facilitator(s) through different forms of media, email or other means. It is critical to remember that these programs are by invitation only and must meet these certain criteria for the Platform’s acceptance of the Investor.
D. Once the Investors paperwork is complete and verified, the Facilitator contacts Investor and a meeting is arranged for the Investor to speak with the Trader. The Trader will explain the programs terms, conditions, the guarantees, the contract details as well as the next step requirements to start the program. Then if necessary, and required by the program terms, the Investor will get instructions to open a new sole signatory account at the Trading Bank for transferring the funds there. The Trader has prepared this process before the Investor is aware, which expedites the bank account directly without delay. Should it be that the Investors institutional bank is one of the approved platforms banks the investor will be required to prepare his own bank to block/reserve those apportioned funds for one year with no transfer or interest accrual allowed….
E. The Investor will receive a contract that states the total gross yield, the percentage of the gross profit reserved for Projects, the percentage for the Trading Group, and the percentage for commissions/fees to be deducted for any and all Facilitators. The net return to the Investor will be wire to Investors return account located in any bank worldwide. When the Investor accepts the contract, the contract is signed and the program is ready to start.
F. The Trader is now ready to leverage the Investor’s reserved money ten times (on average) systematically backing up the arbitrage transactions with the funds currency enabling a credit line that remains in the bank account. This account is screened before each arbitrage buy-sell transaction. Trading now continues, and the profit is paid out once per week (or per day or per month or whatever the program terms stipulated) to the Investor. The Investor instructs the bank to wire out the commissions to the broker’s bank coordinates. The program continues the above loop for each week until the end of the program (usually forty banking weeks via one solar year).

These programs work with cash only. This fact does not mean that the Investor will only be accepted in the case funds are not liquid. The Investor can be accepted by some Trading Groups as well with financial assets such as MTN, BG, CD, SBLC, SKR, etc. that the Trader will then use for getting his own line of credit at the Trading Bank to run the program. In this case the Investor will have the advantage of profiting both from the program as well as the yield coming from the instrument (i.e. the scheduled interest from a CD or MTN).


ANALYSIS OF RISK INVOLVED IN PPO CONTRACTS


While we have seen this process move expeditiously and with little fanfare, sometimes finalizing PPOP contracts with Investors can be a strenuous process.

We will focus on the two underlying sinkholes that can and do affect these transactions on the following criteria:

A. The Applicant Investor (AI);
B. The Facilitators (head facilitators, brokers, intermediaries)


FROM THE INVESTOR’S SIDE

With the initial contact meeting, the AI will not be able to meet the Trader in this qualifying stage without the proper introductions. As such, an introduction requires that the AI be qualified as well as verifying that appropriate funds are available to enter into this platform. The main reason why there is a Facilitator-broker “chain” is because the people in the Trading Groups (the use of the term “trading group” is used here because there’s always a small group of people that work closely together, alongside the Trader) have neither the time nor desire to pre-qualify speculators who many times are looking for no more than a greater interest in what these platforms offer while having no intention or capability to perform.

Should you be an AI with no PPOP home (or looking for another one), we encourage you to establish contacts with brokers/intermediaries and hopefully they will be able to place you in contact with a performing Trading Platform. The notion that one can chase after “a real trader” is self-defeating at best. The reason is that so-called traders in the financial world are not involved in this kind of trading. The reality is that a Trader does not speak an AI who hasn’t been cleared first.

When it comes to non-performance, in most cases delay is on the AI’s side. The AI doesn’t qualify, usually because of sacral reasons;

A. A lack of verified funds;
B. The Bank in which ha has the money is too small and/or is located in a non-accredited country;
C. Funds cannot be moved, or they are a bank instrument that cannot be used;
D. AI tries to proceed to his own procedures, rules, and beliefs. Most of the initial AI documents received at reception are not in compliance with the program regulations.
E. Sometimes deals are killed because the Facilitator did not understand what the steps needed to be followed.
F. The single-handedly worse that can be done is when a member of the Facilitator or AI’s “shops’. Trying to find the best deal/. It is better to get 100% per month from a program that performs than having to wait for 200% per week from a program that was suppose to work (but never will).

There are Brokers and Investors who have chased around for years for a “better” alternative, consequently without being able to find an open door. It all spans from a lack of credible sources.


Reasons Why The PPOP’s Falls Apart:

No Cash Or Workable Assets
Not Enough Currency Or Assets
A Poor Explanation Of Where The Currency Or Assets Are Coming From
Applicant Investor Does Not Have Full Control Of The Currency Or Bank Instrument
The Funds Don’t Belong To The Applicant Investor
Funds Are In A Non-recognized Banking Institution
Program Procedures Are Not Followed
Collaboration With The Trading Group Is Lackluster
Trader Documents Are Not returned Quickly
Applicant Investor’s Identity Cannot Be Confirmed
Applicant Investor is already Blacklisted Or Under Investigation

Remember the Trading Group does not have to give an explanation why the AL doesn’t pass through the clearance. It is wise to work with those who already a relationship with Facilitator Groups and in turn have an Investor Network which gives them a platform that can be more subjective with who is brought to the Trading Platform.








Points To Remember:

A. Investors should understand what is required to qualify:

A minimum of $100 million in (U.S.) cash located in a major bank in Western Europe, USA, Canada or Australia. Money that is clear, can be traced back, and has a non-criminal history.

B. That the Investor himself (or the company he represents) be cleared. For individuals this is an identity control that the person exists. Note: Individuals originating from certain countries will never qualify.

C. Investors are invited and still may not be accepted. They can never demand to be accepted just because they have the ample funds or are (believe they are) prominent people. Most associates in the different trading groups are at what is referred to as a “one-pass” managed applicant. Should the applicant become contumacious, usually a non-involvement decree is issued shortly thereafter.

D. The Investor himself must be the one and only one that the Trading Group deals with. The Investor is not allowed to let his attorney or any other associate contact any person in the Trading Group, Notwithstanding the Facilitators and Trader. If the Investor does not speak English and needs assistance, then a limited Power of Attorney must be signed for such a person. A LPOA will only be accepted for communication purposes. The Investor still needs to sign the documents.

E. Investor(s) who have the least money are always placed last in queue. An Investor with $500M will get more attention than one with $100M. Investors who have assets other than cash will also be placed last in queue. This means that the sub $100M clients must be patient while they we put their queue in place in the system. This process may take several weeks to a month.


F. It’s not easy for an Investor to be sure that he meets the right people (intermediaries and brokers who know what to do, and not to do, and are working with a performing Trading Group). The best that can be done is to become educated and not lured by those who claim that their program will give the highest yield.

Trust and patience is the key. These two facets can be the greatest initial problem from the Investor’s point of view. However there is no other way to come in contact directly with the Trading Group before initial steps have been cleared (which requires passport and proof of funds). The Investor might be able to talk with some one in the group, or at least the Facilitator once the required documents have been submitted.

G. If the Investor for any reason is unsatisfied with the Facilitator’s broker and/or intermediary, then he can try another one after having first sent a Cease and Desist order. Instances where an Investor is already blacklisted in the system, is usually an indication of shopping had taken place in the past or a consummation of a fund already in place was dissolved by the Investor. The Facilitator and its members cannot be blamed if the Investor is shopping around. Concurrently, those brokers/intermediaries who make the mistake of shopping around will soon be blacklisted as well.


These are some of the main risks the investor can meet and very easily overcome:

A. Nothing will come out of the Trade; no contract and no profit, just frustration after weeks/months of waiting.


B. Investors or Intermediaries and/or Brokers are “shopping around” with client’s documents which sooner or later will result in blacklisting.

C. The Investor is told that funds must be moved out of Investors control to an escrow account. This is never done in a legitimate PPOP and relationships should be terminated immediately with the group(s) responsible.

D. The Investor is told that a bank instrument for his money must be bought. In the worst case this instrument is a fake or impossible to use.

E. The Investor is told to be pay upfront fees, because a leverage of his funds must be done, or some bank instrument must be discounted, or banking fees must be paid, etc. The upfront fees paid are lost, and nothing more will happen.


FROM THE BROKERS AND INTERMEDIARIES SIDE

There is a common misuse of such terms as brokers, intermediaries, facilitators, etc. and the fact that they are not official terms in banking or finance. Such terms are used within Trading Groups and in their communication between each other. The problem is that sometimes a broker or intermediary claims they are in direct contact to a person with that title. As evidenced in the REO market, this doesn’t guarantee anything, because any person can call himself a Trader or Commitment Holder. Since such positions cannot be verified (at the first stage) such titles can be meaningless as seen from an Investors point of view.

Many times there is a chain for a particular Trading Group. Here are two reasons why you may see a chain: First, Trading Groups are not allowed to solicit, nor are Brokers and Intermediaries. However, an Intermediary might know an Investor with money, who knows a Broker, who also works in connection with one or several Trading Groups. Notable, is when an Investor already has a prior/ongoing working relationship with a Broker who may have been instrumental in assisting with raising capital for an Investor’s projects. Normally, the broker will educate the Investor gradually to the opportunity, so that it is not the primary focus, yet an invitation worthy of exploring further.

Secondly, to protect the involved parties on the side of the Trading Group, Trading Groups work through several Brokers and sometimes the Brokers work through several Intermediaries.

The additional tasks of a good Broker is to screen the potential Investor’(s) filtering out the least qualified Applicant/Investors while at the same time collecting the right documentation. This helps expedite the future transactions of the Head Facilitator to the Trader and validates the Investors position within the group.

The most common risks or problems that a broker, an intermediary or facilitator can face during their own work in this business are:


A. They need to handle a few dozen to hundreds of clients before finding the right Applicant/Investor;
B. They could get just a part of the truth regarding the asset of the Investor at an early stage that may be discovered later to be unworkable after weeks or months of efforts.
C. They may have difficulty qualifying themselves with new Investors because they cannot show any past performance or past contract and the relationship with the Investor is just a matter of trust in the early stage.
D. There could be a long list of brokers and/or intermediaries between the Investor and the Trading Group. In this case a broker in the middle can destroy the deal by not giving the right information of the Investor to the Trading Group and/or making problems with the fee agreements;
E. There could be several levels involved for the intermediaries between the Investor and the Trading Group (the facilitator) is the most important person. This person usually has a direct contact with someone in the Trading Group. Any other broker beneath the above Facilitator has a lower value in the hierarchy. The broker and/or the intermediary can have problems showing the Investor his level in the hierarchy at an early stage.
This is really a fairly simple process though. You just need a solid Investor with minimum funds of $100M (U.S.) in one of the top twelve accredited banking institutions, a Broker in direct contact with a real strong Facilitator/Trading Group and a right Applicant/Investor who can follow the procedure in a risk free position. However, Investors sometimes experience holdups with their funds, are not in full control of them, they cannot or do not want to move their assets, they are not cleared or they are not collaborative enough to deal with the Trading Group and/or with the Brokers.

The Broker’s job is a very stressful activity and someone looking to get into this niche “fraternity” could have a hard time for many years educating their self before getting the right attitude (frustration and patience goes with the territory here).

SCAMS

From time to time you may hear about scams (or potential scams) in the High Yield Investment Programs arena. As are now probably aware, one of the conditions that facilitates and encourages such scams is the embodiment of the non-solicitation environment and the private approach required. Such followed protocol forces most of the insider information shared between the Head Facilitator and the Trader to remain as pure conjecture through the mouths of the outside world. The “facilitates” a propagated level of ignorance in this matter. Those intent on forcing their way into this tightly guarded niche and sabotaging Investor/Broker relationships cause undue duress to those truly looking to help qualified individuals.

The Internet is now full of different money making opportunities that promise to return a high yield on the small investor’s money. In most cases such programs are disillusioned enchantments. Even if a few might be managed by honest people who are trying to compile enough funds in order to enter this kind of trading, failure is very high on the ladder. Sometimes often referred to as “bundling” the funds. The more flagrant HYIP’s will promote promises of high yields with very low amounts of money and over very short terms. They are simply non-existent, and no broker let alone the investor realizes a return.

First, in many counties it is illegal to pool money with promises of a high return. Secondly, we have the problem of a number of participants to be managed. Thirdly, is the time factor; unless the program is hyped up on the Internet, it will takes years to aggregate that amount of money. Fourthly, is the management aspect? How can they be trusted? If they manage to compile $100M from thousands of participants they will not pass the clearance, because compiled/pooled money like that is not allowed to enter this type of trading.

However, rest assured. This is the few not the norm. As is obvious, most investors who are in the upper echelon of wealth are already in a position with a team in place able to protect themselves both legally and financially with regard to their wealth management.

CONCLUSION
We cannot stress the importance of becoming aligned with groups that understand the process of PPOP’s, BG’s, MTN’s and all other facets of these little known investment instruments. Do your research, qualify your sources and rest assured, there are ethical, viable groups out there willing to secure another position within this “fraternity”.

Remember you must be invited into the world of PPOP’s. It is the Investor who is petitioning for entry, not the other way around. Strict protocols must be maintained, confidentiality is a must and due diligence is required. Once the steps outlined throughout this document are followed, it is just a matter of time before the next trade is an arbitrage buy-sell transaction.

It is my hope that this exposé has precipitated more of an understanding with the offerings PPOP’s can generate. With diligence and resourcefulness, it is just a matter of time before you find a Trading Platform that will integrate efficiently within your investment strategies.
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