In today’s PPP market, things have stayed the same in some ways and are completely different in others. After watching the demand for project funding skyrocket, many unsuccessful PPP brokers had enough.  With a growing number of investors looking for project funding, PPP brokers started to look for a way to capitalize on this demand, whether it was ethical or not.

In this article we will explain viable ways to fund projects, while alerting you of a few scams that are far too common in today’s private placement industry. As most people know, the typical way to fund large-scale fund projects is by investing in private placement programs. Unfortunately, many investors now think there are other methods to fund projects, seeking new “programs” with lower entry requirements.  As you’ll see, in most cases, these smaller “alternatives” turn out to be scams.  To help you spot them the future, we have provided a great list below for our readers. Covering five of the most common scams in private placement, it gives you everything you need to stay safe, and productive. Scroll down and take a look!

Project Funding Scams

SBLC Leasing Scam:  In recent years, the SBLC (Stand by Letter of Credit) has come onto the scene in the private placement business. In most cases, “providers” claim to have the SBLC issued from the bank for a small upfront fee. Supposedly, once the SBLC has been received by the investor, they can use it as collateral for private placement and other opportunities. Though this sounds great to naive investors, the truth is, SBLC leasing never works. First of all, SBLC’s are not discountable instruments, and no bank will “cut” an SBLC for a small upfront fee. Second of all, if the investor plans to attain an SBLC, they must have the full value to give to the bank before they issue it.  In short, you can’t walk into a bank with 1M and get a SBLC for 10M. Despite what many PPP brokers may claim, leased SBLC’s are not the way to go, no matter what type of transaction you’re pursuing.

Bank Instrument Leasing:  The concept of bank instrument leasing has been growing in popularity since 2000.  With more and more PPP brokers entering the business via the Internet, it has become a niche that has polluted the private placement market.  The problem is, leased bank instruments can rarely be used for any type of transaction, whether it’s private placement or otherwise.  Think about it, could you take a leased car into a bank and get a loan against it? The answer is obvious. Since you’ve only leased the asset and do not have full ownership, no bank will recognize it as personal collateral. Though many eager brokers may tell you otherwise, bank instrument leasing can serve only as proof of temporary collateral, and NOTHING else.

Small Private Placements:  As we have stated in past articles, private placement investments require a large amount of capital to invest. Though there are programs which require smaller amounts, the truth is, you still need to have a lot of money to consider private placement.  In most cases, the investor must have 100M or more in liquid assets to even apply. Unfortunately, every investor seems to have interest in private placement, and due to this growing demand, brokers now see it as an opportunity. In today’s private placement market, ironically, you hear about more small programs than you do large programs. In fact, the PPP business has now become horribly polluted with “small programs” and “small investors”, both looking for something that doesn’t exist.  Do yourself a favor, if you don’t have 50M+ in net worth, chalk it up!  Even though other alternative investments may be great for you, PPP is only beneficial to those with sufficient capital.

Joint Venture Funding Scam:  In recent years, I have started to hear about a project funding scam which is a little trickier than most.  In this case, the “JV” partner leases the instrument to the investor for an upfront fee and a portion of the PPP profits.  Since most investors are new to private placement, they feel encouraged to move forward with the leased instrument since they are “partnering” in the private placement investment. In addition, the investor feels comfortable because conversation typically shifts to the high yields of PPP, taking attention away from the instrument leasing process. The problem is, most private placement investments never turn out as planned. For example, if the program didn’t perform, the investor would spend 400k+ for a worthless bank instrument while the provider kept the leasing commissions. Though this may sound far-fetched, it’s become a common “back-end” scam in PPP, and there is little to no recourse for investors.

Upfront Fee to Fund Projects:  If you are trying to fund a project, you should NEVER pay an upfront fee to attain funding. I don’t care if they have “sample funding letters” and “proof” of past funding success, it’s never worth it.  We have been in the business for several years, and we’ve only heard of a few successful funding opportunities which required fees.  We know, you may love your project more than life itself, but you should always take a step back and be smart.  If you do choose to pursue a project funding opportunity with fees, make sure to ask yourself a few questions before hand. First, what proof does the funding provider have of their performance? Second, where is the money going, and how do you get it back if funding doesn’t occur? Third, do the fees, time frame and other details sound feasible? Last, does the funding provider have references from past investors?  If you ask yourself these questions it should always be any easy decision, whether you choose to move forward or not.

Though project funding scams come in all shapes and sizes, we have listed the most common schemes above. With the desperation of PPP brokers growing, unfortunately, project funding scams will always be on the rise.  Since very few brokers in the private placement business are closing deals, many of them try to make commissions in any way possible. Whether its by sugarcoating details, or putting investors in harms way, its all about the paycheck for unethical brokers. For this reason and others, please be safe, because greed is a key variable in every private placement transaction.

In summary, the private placement market has become flooded with funding scams over the last decade. Though these scams are everywhere, the truth is, you CAN still be successful funding projects. In most instances, the first funding provider will NOT be the right pick, so stay patient. Remember, you never want to become desperate or anxious, or you can put yourself at great risk! You may want your project funded immediately, but the fact is, it’s never worth rolling the dice.  Ask yourself, would you put 400k+ on one hand of poker? The answer is simple, just like identifying scams should be after reading this article…

InsideTrade LLC Staff
(412) 235-2855

Until recent years, very few private placement brokers mentioned SBLC’s, or even knew what they were. This was a time where investors pledged cash or bank instruments for their private placement investments, not “fictional” leased assets.  In today’s private placement world, SBLC’s are all over the scene, popping up like weeds! Unfortunately, they have become popular in bank instrument leasing programs, and are now associated with this “niche” of the industry.   For those who don’t know what a “SBLC” is, let’s start at the beginning by defining its meaning and applications.

By definition, a SBLC (Stand by Letter of Credit) is a document issued by a bank, guaranteeing payment on behalf of a client. This is used as a “payment of last resort” if the client fails to fulfill a contractual commitment with a third party. In all reality, the SBLC is just a piece of paper with a “value” backed by the good credit of the bank, allowing clients use a “conditional collateral” if needed.

The SBLC (Stand by Letter of Credit) is commonly used when two parties enter into a contract calling for one party to arrange a L/C in favor of the other.  With any Stand by Letter of Credit, the agreement is the SBLC will NOT be “drawn” unless the owner defaults on the contract.  If the beneficiary was to monetize the SBLC without prior agreement, the owner could dispute the contract in court. The truth is, SBLC’s are rare and used MOSTLY in industrial or bulk commodity sales, serving as a “performance bond” of sorts.

Despite what private placement brokers may claim, the SBLC is not used for leasing or investing very often. Just like we explained above, it’s MOSTLY used in bulk, wholesale, and logistical markets. If you are an investor, watch out for the infamous “SBLC leasing scam”.  Don’t waste your time “leasing” an SBLC, or having it “fresh cut” from the bank, it will never fund your project or get you into PPP.  The fact is, unless you are using it for credit enhancement or proof of temporary collateral, a “leased” SBLC will ALWAYS be useless.  In addition, if you are a private placement broker, ALWAYS BEWARE of investors with SBLC’s.  This could mean the funds are leased, fraudulent, or a part of a prior deal gone wrong.  All in all, the SBLC is legit, but brokers have tried to apply it to a process it isn’t made for.

In summary, though the SBLC is a credible term, it’s ONLY important when private placement investors are in the USA. Since USA banks do NOT offer the MT 760, the SBLC is the only safe way to assign a trader as temporary beneficiary. Remember, do yourself a favor and BEWARE of PPP brokers who use the term “SBLC”.  In all reality, incorrect usage of the term should be considered a HUGE RED FLAG and nothing less!

If you want to learn how to spot other”warning signs” in PPP, take a minute and read the article “Top 10 Red Flags for Private Placement“. It will help you identify real opportunities, while providing key tips to keep you sharp in this oh so unique “business”…

InsideTrade LLC Staff
(412) 235-2855

With the recent popularity of bank guarantees, you may have met people who are leasing, trading, or issuing “BG’s”, and asked yourself, “What are they talking about”? Well, since this is a critical question to answer, we thought we’d uncover the facts for our readers. By exploring the bank guarantee’s definition, common uses, and other related tips, you will have the education you need to apply all of its benefits.  First things first, let’s cover the meaning of the term bank guarantee, and relation to the private placement markets.

By definition, a “bank guarantee” (“BG”) is a debt instrument created by banks which carries a predefined face value, date of maturity, and annual interest rate. For example, you could have a 1 year note from UBS with a face value of 100M, collecting a coupon (interest) of 6.0% per year.  If the investor was to purchase this “BG” from the right seller, they could get the bank instrument at a discount from face.  Depending on the standards and risk tolerance of the investor, they will usually pay 70-95% of the instrument’s face value to own the note.  Once the investor officially owns the bank guarantee, they collect the 6% annual interest, and the full value of the instrument upon maturity.

Even though bank guarantees have similar characteristics to other debt instruments, they are unique due to their high value, flexibility, resale potential, and discount. Typically, investors purchase bank guarantees to collect interest, and in many cases, they use the “BG” as collateral for loans and other opportunities. The great thing is, this allows the investor to earn interest with minimal risk, while still retaining access to liquidity. Though the “BG” sounds like a good asset to hold, in most cases, bank guarantees are traded repeatedly until the market value nears “face”.  Since trading these notes can produce much quicker profits, many have now jumped on the private placement bandwagon, aiming for the highest yields possible.

In today’s private placement business, bank instruments are typically bought and sold in the secondary market. If all goes as planned, the PPP trader buys the discounted instrument from the bank, and then sells it to a predefined “exit buyer” at a higher price.  Since this process is based upon prior contractual commitments with the exit buyer, if the PPP trader is real, there is basically no risk involved. To simplify things, lets give you a quick example. If a PPP trader purchases 5 instruments from the bank per week, making 9 points per trade, they would have 45% in weekly yields. Since the PPP trader has contracts with “exit buyers” protecting their purchases, all they need to do is complete the basic formalities and wait for the money to come on. Sounds great, doesn’t it? Well, if you are one of the lucky few who strike it big, it sure is…

The reality of private placement is, most people are unsuccessful despite years of efforts. If you’re smart, you CAN meet plenty of millionaires, but finding a PPP investor with 100M liquid can be quite a task! Since this is a fact that many brokers learn early on, unfortunately, common sense can get thrown out the window when money comes a calling.  A perfect example of this can be seen in the niche of “bank instrument leasing programs”.  The truth is, with investors “chomping at the bit” for private placement programs, the idea of bank instrument leasing was created so brokers could have something to offer smaller clients.  Even if the investor didn’t get into a program, since the instrument was already leased, the brokers would earn huge commissions from the deal! Sounds a little deceptive, right? Well, though bank instrument leasing can work in RARE situations, it should NEVER be considered safe. Remember, most private placement brokers are focused on their own personal interests, not the risks presented to investors.

In summary, the bank guarantee is an important tool to understand, but you MUST utilize it appropriately.  Though it sounds great to pay a small leasing fee for a 100M “BG”, it’s never worth the time or risk, TRUST ME.  If you want to use a bank guarantee in private placement, the truth is, it must be cash backed and 100M+ in value.  In addition to that, the instrument must be lodged in a bank which is willing to complete an MT 76o. Despite what other private placement brokers may say, these are the FACTS of bank instruments, and if you try to believe otherwise, well, good luck!

Remember, the private placement and bank instrument markets do exist, it just takes education, experience, and intuition to be successful. The most important point is, NEVER set a time limit on your efforts.  If you make the decision to NEVER give up from the beginning, you’ll eventually reap the benefits of private placement, no matter how long it takes…

InsideTrade LLC Staff
(412) 235-2855

To truly understand the purpose and functions of bank instruments, we must first define what a bank instrument in fact is.  By definition, bank instruments are asset backed notes issued by a bank to an investor which mature over 5-10 years, collecting an annual coupon (“interest”) until it matures at its pre-defined value.

For those who don’t understand why debt instruments, bonds, or notes are created, let’s explain it all in 2 sentences:

Companies, or in our case banks, create paper notes (“IOU’s”) which they sell to investors, guaranteeing a certain annual interest and maturity value.  This allows the investor to collect their expected profit, while the bank accesses immediate cash to meet capital requirements for additional financing opportunities.

Unlike its boring cousins (bonds), the bank instrument is rather complex, and is typically referred to as a “hybrid note”.  Unique amongst most debit financing notes, bank instruments: collect high annual interest rates, are backed by top rated banks, and are issued ONLY in amounts of 50 Million EURO or greater. Though those are intriguing qualities, the key is: bank instruments can be purchased at a discount from face value, and traded to investors in the secondary market.

Since we understand this topic is rather complex, we created a 5 step summary to clarify the details of how bank instruments evolve. This will explain the relation of bank instruments to private placement programs, and the investment benefits to purchasing bank notes.

Bank Instrument Steps to Maturation

1. Once the investor or trader has been cleared through compliance, the issuing bank will “cut”/create an instrument (Medium Term Note or Bank Guarantee), naming the investor or trader as the sole beneficiary.  This instrument will have a predefined interest rate (0-7.5%/yr.), and a value on the date of its maturity. At this point, the purchaser would more than likely pay a discounted rate to the issuing bank, ranging from 60-90% of face value, depending on their relationships and the instrument’s size.

2. If the investor chooses to hold the note, they just collect interest and exercise the value upon maturity.  If the initial purchaser was a “trader”, they would have a pre-defined “exit buyer” to buy the note at a higher value (ex. Trader buy at 65, sell at 74).  As you can see with spreads like that, if the trader can consistently access instruments, they can organize a very profitable private placement program.

3. Once the first purchaser has purchased the note, they will usually resell it to another buyer at a higher price.  Though the buyer isn’t purchasing the note directly from the bank, many private placement programs are run by middlemen who fit right here in the process. Usually, they will purchase the note, and make a profit similar to what was made off of them (ex. Buy at 74, sell at 81). People in this position are usually high net worth individuals, large corporations, hedge funds, etc.

4. The final middle man repeats the process the others have done, but they look for a different type of buyer. In this case, the note has been traded several times, and is at a smaller discount than it originally was. For many that may not be appealing, but for for some that seems intriguing and less “risky”. Since everyone can verify the instrument has been owned by several companies (“seasoned”), institutional buyers such as pension funds, hedge funds, mutual funds, and other low risk ventures flock for security and higher yields.  As expected, the final middle man usually sells the note to an institutional buyer for a profit similar to what was made off of them (ex. Buy at 81, sell at 90).

5. The final purchaser holds the note, collecting the difference between the discount they paid vs. face value, and the annual interest until the time of its maturity.

Though the information above is accurate, the spreads per trade may vary depending upon a number of variables.  To state the obvious, different traders, banks, relationships, and strategies can make prices/profits fluctuate.

Now that you have gotten a true understanding of what a bank instrument is, as well as its various purposes, it’s time to do some more exploring through our related articles. Take a look below; expanding your knowledge base can only speed up your path to success!

InsideTrade LLC Staff
(412) 235-2855

For those of you who understood bank instruments prior to this article, we hope this provides additional insight to educate you further. For the rest of our readers, this information will open the door to a new understanding of wealth, while providing facts to help remove uneducated PPP brokers from your network.

By definition, Medium Term Notes (MTN’s) are debt instruments which are created by banks and sold to investors, having a predefined face value, date of maturity, and annual interest rate.

For example, you may have a 10 year note issued from Barclays Bank worth 100M, collecting a coupon (interest) of 6.5% per year.  Each year you would receive 6.5M until the date of its maturity, where you may cash it in for its full face value.

Though an MTN has similar characteristics to other debt notes, it is completely unique due to its flexibility, price, resale potential, and ability to be purchased at a discount from face. Now that you know what a medium term note is, let’s see why they have become so popular recently.

Over 50 years ago, when medium term notes (MTN) started to become available, there were very few passive investments which could compete with the benefits of owning a bank instrument. Given the high annual interest rate, possible discount from face value, and solid backing by top 25 banks, many flocked toward those who issued and owned the notes, looking for ways to financially capitalize.   Once the idea of “trading bank instruments” caught on in the secondary market, the private placement business grew steadily, until the entire business changed with the introduction of the internet.

With the explosion of the internet, the secondary market has been flooded with tons of new brokers trying to broker buy/sells of medium term notes, and bank guarantees. Though it may be possible to close a bank instrument deal, it takes an act of god to do so. The real discussions about bank instruments, at least for those who are successful, revolve around private placement programs.

Bank instruments, such as medium term notes and bank guarantees, are the lifeblood to any private placement program.  Since these notes can be purchased at a discount from top banks, traders can earn quite a hefty profit, all while being risk free due to a prior contractual obligation they had with an “exit buyer”.

As we all know, an “exit buyer” is the entity which purchases the MTN/BG at a slightly higher value, but still discounted from face. Once the first exit buyer purchases the note from the trader, the process repeats itself several times until a final buyer purchases it to hold until maturity. By that time, the note has a very small discount (ex. 93% of face), but many conservative buyers are happy with the remaining spread and annual interest.

Though we could go on forever on the different topics related to medium term notes, if you understand this article, you will have far more knowledge than most you will speak to.  If you would like more information on bank instruments, and their role in private placement programs, please read our extensive article by clicking on this link: “Understanding Bank Instruments, from Bank to End Investor”.

Remember, education promotes safety, and in the private placement world, safety always comes first.

InsideTrade LLC Staff
(412) 235-2855

Over the last few years, leased bank instruments have flooded the private placement marketplace. Whether it is SBLC’s, MTN’s, or BG’s, we hear brokers pushing these deals every day. What is the problem with bank instrument leasing you may ask? Well for starters, they don’t work in most of the scenarios they claim to be used for.  The fact is, no one will assign you full control of a 100M bank instrument for 3% upfront. It just doesn’t make sense! If anything, they’d block the bank instrument in your favor via MT 760, which would prove collateral was on hand, but you’d have NO CONTROL over the asset.  Once the bank instrument is blocked via MT 760, it can’t be blocked again until it’s returned unencumbered to the owner.

Despite what we try to teach investors, we’re sure some of them will still try to lease bank instruments. The truth is, you should take the 300k you would spend on the leased bank instrument and go to Vegas! You’d have better odds there, by far. If you are going to lease a bank instrument, please be safe. We are only reiterating this point for one reason, your safety.

If you are interested in learning more about leasing bank instruments, take a look at the articles in our Blog. This will give you a grip on the realities of leased bank instruments, while providing invaluable education for your future.

Over the last decade, bank instrument leasing has evolved from an extreme rarity to a rapidly growing industry.  You may say, “Isn’t this good for both investors and brokers?” Well, bank instrument leasing can definitely be good for the brokers, but for investors, it can be the exact opposite.  The reality is, when you lease bank instruments, you will NEVER have full control over the asset.  Think about, if you owned a 500M note, would you let an investor put it at risk for 3% (15M). I don’t think so! Even if you get an MT 760 to your account, the leased funds are blocked. Though leased bank instruments can prove temporary collateral, you can NEVER lien, block, or assign leased funds to another person. This is the part most leased instrument providers fail to mention, leaving their pockets fatter in the midst of your failure.

Even though we have warned our readers, we know some of you will still choose to lease bank instruments. For those who pursue bank instrument leasing, please be safe and extremely cautious. There is no risk in assessing leased instrument providers, but always remember what you have learned here before making a decision. For more information on leased bank instruments, take a look at the articles in the private placement category of our blog. This will teach you the facts of leased bank instruments, and far more. 

The idea behind a “PING” private placement program is that the client leaves the money in their own account, and the trading bank checks on it to make sure the full balance is still available.  This verification of the funds by the trading bank is referred to as “PINGING” the account, and supposedly is done on a daily or weekly basis to ensure the balance remains stable. This is also the same premise behind an “administrative hold”, which many inexperienced brokers will refer to as well.

For many of the beginners in the business this may make sense in theory, but the problem is simple, THERE IS NO COLLATERAL IN PLACE.  For the trader to be able to access discounted bank instruments, they must have liquid collateral to purchase the notes.  This liquid collateral MUST be derived from the client’s assets, which are usually blocked or conditionally assigned to the trader for the period of the trade. Once the assets are blocked or assigned to the trader, they can access a line of credit against the client’s collateral, and start trading on behalf of the client to generate profit.  Since “PINGING” the account leaves the client’s funds unencumbered and no assets in favor of the trader, the bank will NOT give the trader a line of credit, and therefore, the “program” will more than likely produce excuses, rather than returns.

The fact is, private placement traders always need a form of collateral to access a line of credit, and a “PING” structure does not provide this.  Without this line of credit, the bank instrument is never “cut” and trading will never begin. Despite what you are told, EVERY investment has a degree of risk to it, and typically the investments which offer higher potential returns, have higher levels of risk as well.

If you are a reader, and have closed a “PING” transaction in the past, please post your experiences, but after 7+ years of consistent effort, we feel this structure is nothing more than a sign of future disappointment.

InsideTrade LLC Staff
(412) 235-2855

In this article, we will overview the typical process to complete a private placement transaction, and most importantly, we will supply common obstacles that you may face along the way.

10 Steps to Private Placement Success

(1) The client provides a proof of funds and passport copy along with their compliance package

NOTE: 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.

(2) Trade group submits application to the compliance department for review

NOTE: 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.

(3) Client passes “due diligence”, speaks with the trader, and receives the contract

NOTE: 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.

(4) Client signs the contract, and then the trader countersigns it to make it official

NOTE: 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.

(5) Client contacts their bank to complete the private placement transaction

NOTE: 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.

(6) Client’s funds are blocked, conditionally assigned, or transferred to the trade group in accordance with the contract

NOTE: 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 it 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.

(7) Trader accesses the line of credit from the trading bank

NOTE: 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 favor.

(8) Trader uses line of credit to have discounted bank instruments issued from bank

NOTE: 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.

(9) Client receives payment of profits weekly or according to the contract

NOTE: 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.

(10) Client uses profits to fund projects and retains the rest for personal use

NOTE: 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 FED overseas 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.

In summary, if you understand what we have described above you will know how to proceed with a private placement transaction, and be aware of how to overcome obstacles before they present themselves. Though there are some programs which follow different steps, this is the basic template for all REAL private placement opportunities above 100M.

For more information on private placement programs, please scroll through our “private placement category” to find more great articles.

InsideTrade LLC Staff
(412) 235-2855

Over the last few years, investors have started leasing bank instruments left and right, turning the private placement business into the “Wild Wild West”! The problem is, even after years of endless pursuit, very few have been successful with leased bank instruments.  The reason is simple, and in fact, it’s common sense. Leased bank instruments are typically blocked in favor of the investor. Once the investor has received the MT 760, the funds are frozen and can NOT be touched. Though this may be sufficient for opportunities which simply require proof of collateral, in ALL OTHER cases, it would not work.  The reality is, once the bank guarantee is blocked in your favor, you can’t block it again! Unless you have a very creative way of monetizing something you don’t own, good luck.

In this brief definition, we have outlined the facts of bank instrument leasing. Though we would never lease bank instruments, we know that some of our readers still may give it a shot.  If you are one of them, please be cautious and diligent in your leased instrument voyage. It never pays to jump the gun, especially in the niche of bank instrument leasing.

If you would like to learn more facts about leased bank instruments, take a look at the articles in our blog categories. This will teach you the facts, risks, and myths associated with bank instrument leasing, and far more.

You may ask yourself, why are “private placement programs” growing so fast when it is such a tough business to succeed in? Well it’s unfortunately become the nature of most humans to chase the dollar, and claims of fast money. Let’s face it, if you’re rich, it is rather intriguing to consider something that can double your money every month, or “better”!!

With all of the recent hype about private placement programs, the most common question I have received over the last few years is:

I’ve heard of all kinds of programs out there, and I want to know, what returns are actually possible in REAL private placement programs?

Since this is such a frequent question and a critical topic to understand, we felt that an article explaining private placement yields was essential.

Below, we have listed different investment levels, and will explain what your opportunities, risks, and prospective yields could be if you found a REAL private placement trader.

DISCLAIMER: Please note, this is not a solicitation or description of any programs associated with InsideTrade LLC. It is rather an explanation of information we have attained from reliable sources that have been successful in the private placement business.  All returns shall be considered hypothetical, and for informational purposes only.

Private Placement Investment Levels

1 Million: This is the level that most investors lose money, or have less than expected success.  Whether it is because they fell for the “piggy back” program, “Bank of America” program, “PING” program, “Bullet” program, or the bank instrument/ proof of funds program, most are never successful. Though there are real programs at 1M, they do NOT trade bank instruments, and offer far lower returns.

MAX POSSIBLE RETURNS: 20% per month

10 Million:  At this level, you may be able to find legitimate private placement programs, but your success depends on if the trader will accept such a small file.  Sometimes there may be other larger files applying concurrently that you can be pooled with, but your yields won’t be as high as the larger file.  In this case, at such a small level, it is still very tough to even be placed in a REAL bank instrument trading program.  As you may know, bank instruments are cut in 100M+ increments, and even with a steep discount, you still need over 65M to purchase just one note.

MAX POSSIBLE RETURNS:  10% per week

50 Million:  Usually at this level, you can find a trader that will combine your file with another concurrent applicant to meet the minimum needed to purchase a discounted bank instrument. Though this is possible, it is not guaranteed that you can enter into a program unless you find a REAL trader, who is happy to make an exception for you.

MAX POSSIBLE RETURNS:  20% per week

100 Million: At this level, the trader can purchase instruments with the line of credit that is drawn against the client’s collateral.  Typically, traders can make spreads of about 7-15 points on each trade (ex. buy 65% of face value, sell at 72%). In addition, there is no need to combine the account with another client, since the client’s funds are sufficient to purchase the note alone. Needless to say, this dramatically increases your potential returns, and opens up opportunities for project funding and humanitarian developments.

MAX POSSIBLE RETURNS: 40% per week

As you may already know, there are many programs out there that may talk the talk, but when it comes to actually paying out, most of them disappear, or change the expected yields at the last minute.  Though yields can be even higher for some opportunities, it is very unlikely that you will find a safe and stable program earning more profit than the numbers listed above.

Unfortunately, everyone knows that private placement brokers run the business, and the traders “hide in the shadows” until the client’s information has been attained.  For most desperate brokers, the goal is to attain as many files as possible. In having this goal, many brokers twist words and sugar coat information to get more applicants. As you can see, it is not uncommon to have inflated and unrealistic yields communicated to clients.  In fact, it has become less common to speak with experienced brokers with reasonable yield expectations, than it is to speak with uneducated brokers with big promises.

Though it may be needless to repeat, be careful and use common sense when entering private placement transactions.  Just like everything else, if it sounds too good to be true, it usually is.

InsideTrade LLC Staff
(412) 235-2855