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

1. NEVER establish a relationship through email or Skype, phone is the ONLY way to feel people out.

Do you think that someone who has closed a private placement transaction would want to develop relationships through email or Skype? I don’t think so. Anyone who is successful, and not trying to hide something, values their time.

The only way to establish relationships in the private placement business is to speak over the phone, or meet face to face. People assess your tone and confidence, among other things, and email/Skype are much less effective since you are only communicating through written format. The fact is, you need to be able to feel someone out when you are working with “private investments”.

2. If you are looking to find a private placement program with less than 10M, the trader will NOT be trading bank instruments.

When you ask brokers what they are trading to generate these high returns, most say they are “buying and selling MTN’s and BG’s”. The fact is, bank instruments are issued in 100M notes, and you need serious money to purchase one. The only way you could even get a 10M client into a private placement, is if it was pooled with other clients to meet the minimum cost of the discounted note. (Ex. 100M Note, 35% Discount, Trader Buys for 65M, Need More than 6 Clients with 10M)

If you ever find a 1M program, they must be trading in some other market, or it just doesn’t make sense unless they are pooling money. In short, when dealing with such private transactions, pooling money is very dangerous. One bad apple can ruin the entire bunch, and you can waste tons of time and money chasing dreams. If there is an investigation due to complaint from anyone, the entire pool of money would be frozen for months, and sometimes it can even be years.

The point is, don’t waste your time unless you have the capital. There are other investments at 1M that have GREAT yields and a whole lot more transparency.

3. NEVER tolerate long broker chains in a private placement program.

Private placement deals never get done when there are more than 4 brokers involved (including the program manager and client rep). This is something that is critical when trying to get a deal done in the private placement business. As many of you know, there can be over10 brokers in a deal at time. Think about it, even if you closed the deal, the paycheck wouldn’t even be worth the mediation you would need to constantly perform.

The key point to remember is, if you can’t work your way quickly through the chain, you will be completely wasting your time.

4. Only work with brokers/traders who have closed a transaction before.

Though there may be THOUSANDS of people out there who claim to have a private placement connection, most of them never closed a deal. This can be something they have worked at for years upon years, with no success at all. Think about it, what are the chances that anything will change? To ensure you are not wasting your time, put the pressure on from the beginning. If you are aggressive on the phone and ask them immediately if they have been paid, you can tell by their response and tone if they are legit. Use that technique, as well as their level of intellect and experience, as your guide.

5. Use your gut instinct. NEVER BLIND YOURSELF by thinking about the money you are promised. Focus on the transaction now, and celebrate later.

The most critical and frequent mistake is focusing on the money, and not the private placement transaction at hand. Sit back and let this one soak in, there is some serious danger associated with following the zero’s and not common sense.

When clients hear about the “huge returns”, many make excuses for the inconsistencies that evolve over the course of most fake transactions. Look straight ahead at what you have or DON’T have, and keep the money and celebration for after the transaction. Private placement program deals are never closed by those who are greedy, or those who put the cart before the horse.

6. ONLY work with brokers/traders who can answer questions COMPLETELY to your satisfaction.

The thing that irritates me the most is that many brokers try to sell private placement programs like they are used cars. With this “pitch” comes promises of RIDICULOUSLY OVERESTIMATED returns, and miscommunication about the application process.

The fact is, you are not supposed to “sell” or even “offer” private placement programs, they are an invitation only opportunity. In short, if you aren’t blown away by their professionalism, both written and verbal, then don’t waste your time. There is a new breed of idiots trying to get rich quick in the private placement business, and you never want to find yourself to have been their “Guinea Pig”.

7. Ratios are your friend, speak to as many people as possible and create rules to qualify new possible leads. Never settle for something that feels less then genuine.

Today, there are literally thousands of people in the private placement program business. In fact, when we did our last count, there were over 40,000 “brokers” who have been in the business at some point over the last 5 years. Think about this for a second, there are maybe 100 of those people who are connected to a real opportunity, and as expected, those people are the hardest to find. It is a lot easier to get in touch with someone with no past success, than someone who is rich from past deals, and really doesn’t need the transaction.

If you want to be successful, you have to relentless. First, pick up a phone and contact everyone you see out there online, Second, rip emails from every related keyword you can think of to build contact lists. Third, keep notes and rate everyone to make sure you have records of the people you were impressed by. Once you send out some email blasts, and speak to thousands of people, you will then know the realism of your goals. Remember, ratios are your friend in the private placement program business. If you settle early, you may regret it later.

8. If there is a famous or public name attached to a private placement program, demand to speak with them to ensure you are in
fact connected.

Though there are a few well known people in the private placement program business, you always want to make sure the name isn’t just “bait” from the brokers. If you come across someone who drops a name, be suspicious, but demand to speak with this “well known” person. If you can verify that they are attached to the deal, then you might be on the right path. Remember, there are only a few hundred people connected to a real private placement program in the entire world, so don’t be too convinced by just a “name”.

9. ALWAYS follow non-solicitation laws, and NEVER state or guarantee the expected returns. All Private Placement Programs are based upon a “best efforts basis”, and NEVER state guaranteed returns.

If you speak with someone, and they tell you that they can “guarantee” a very high return, then hang up the phone. If this happens, I can guarantee you one thing, they have never closed a deal in the private placement business, and they do not understand the non-solicitation laws. If you state approximate or forecasted returns to someone before they go through compliance, without using the term “historical”, you are breaking the law and can be thrown in jail by the authorities. Private placement programs are no joke, you either do it right without luring people in, or you can pay some severe consequences.

10. PING programs DO NOT EXIST in the REAL private placement program business. Please stop promoting them, they NEVER work!

We will make it simple for you to understand, PING programs NEVER WORK. No bank will extend a line of credit to a trader that has no client collateral client in place. If your money is sitting in your account, and they are supposedly “PINGING IT” on regular basis, the lending bank has no authority to seize the collateral in the case of a default by the trader since it isn’t in their hands. The fact is, banks do not lend 100M to some random person unless they have collateral which can be liquidated to replace what was loaned. Even if the trader says they have their own line of credit ready, it doesn’t matter because they legally can’t trade their own money. They must use the collateral of another to stimulate the line of credit to start trading for profit.

On the other hand, if the cash backed collateral is blocked, conditionally assigned, or the trader is made a temporary beneficiary of the asset, the transaction can take place.

KEY POINT: If a client expects to keep their money in their own account, and just miraculously make high returns with no risk, they are BLINDING THEMSELVES with hope, rather than looking at the transaction with common sense. Remember the idea of the self fulfilling prophecy? Well, you can’t blind yourself to the realities in this business, or you will be broke fast.

IMPORTANT

Remember, for every successful investor who completes a private placement transaction, there are another 1000 who waste time following their hopes and dreams, rather than common sense.

For those who are interested in learning more about private placement, and alternative investment opportunities, please contact us via phone. We have worked successfully in the private placement business for several years, and are very experienced in various high yield investments.

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. 

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

This is a question we get every day from people who are new to the private placement business.  Most of the people we speak to are just beginning to do their research, and want to make sure they are not wasting their time with something that’s “too good to be true”.

When you go to government fraud prevention sites, they say that private placement programs don’t exist, but when you read forums and speak to the brokers and traders, they say they do. Who is really disclosing the full truth? Well, let’s take a look at the incentives behind each of their claims.

The brokers are convinced private placement exists, but then again, they are the ones in line to get “huge commissions” on transactions.

The regulatory agencies swear private placement doesn’t exist, but then again, if they openly supported it, the equity and traditional investment markets would collapse, and fraud would rise in the private markets.

When you look at it, they both have strong motives for each of their positions, but there is only 1 truth…

The fact is, private placement programs are REAL and DO EXIST. The problem is, they are extremely tough to screen, and even harder to succeed with. Over the last 10 years the once unknown private placement business has spread all over the internet, which has lead to a flood of inexperienced brokers into the market.  When you combine the recent increase in participation, with private nature of these programs, it can be a recipe for disaster if you are not properly informed.

We are not writing this article to state an opinion, but rather to state fact. We have closed a private placement transaction, and we can confirm they do exist. The only thing to remember is this, it took us over 7 years, and thousands of contacts to find one program that performed.  We literally contacted over 20,000 people who were in the business, and now we work with less than 10. In short, think of this as a search to find a needle in 100 haystacks, not as a path to immediate wealth.

For more information, please read our other articles to learn more of our inside tips and experience with Private Placement Programs, Bank Instruments, and all of the other Alternative Investment Markets.

InsideTrade LLC Staff
(412) 235-2855