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FACTUAL INFORMATION IS FOR MY INVESTORS AND IS FOR INFORMATION PURPOSES ONLY
The below information is presented in no particular order. We ask that you read and consider this information. If you have any questions, please do not hesitate to email me your questions.
99% of all of the Brokers and Clients that try to participate in this business have never and will never make a penny at this business. This is because they fail to understand and comply with the REAL requirements of this business. 70% of all of the documents submitted to us in this business are fraudulent and are, immediately, turned over to the authorities. Surprising that people that are still trying to pass fraudulent and fabricated documents and think that, as Introducing Agents (IA), we are too stupid to know the difference. 75% of the Client that submit all of the required documents, receiving and sign an Agreement and promise to perform, never perform or their banks never perform and the transaction goes into default and is reported as a fraud. This is because the Client has lied about owning the asset, free and clear. If a Client cannot prove ownership of an instrument, via a copy of the Account Statement or SKR, then they will not be given any consideration for the hypothecation of the instrument. Euroclear and DTC are Screen and Settlement Services. When an instrument is posted to these screens, the instrument is not physically on the screen, it is still in safekeeping at a bank (with a SKR) or a securities house (with an Account Statement). So, when people tell you that there is NO SKR or Account Statement, they are wrong and they are telling you that because they are not the owner and cannot prove ownership of the instrument. Instruments that are Euroclear Eligible including MTNs, Bonds, Stocks, Treasury, Freddie Macs, Fanny Maes and, very rarely, a CD or SBLC. But, generally the CDs and the SBLCs are NOT on Euroclear. BGs are NEVER, EVER on Euroclear or DTC and they do not qualify for an ISIN Number or a CUSIP Number. So, when someone tells you that they have a BG on screen (any screen) you already know that they are lying to you. There is no such thing as a Grey or any colored screen, period. This is just broker nonsense. Only instruments that are registered with the United States Securities and Exchange Commission can be on DTC. And, this does not include MTNs, BGs, SBLCs or CDs. Euroclear and DTC are screen services. They are not parking lots for instruments or for cash funds. When someone tells you that you can screen and validate their cash funds on Euroclear or DTC, you know that they are lying to you. The U. S. Treasury does not issue post-dated checks, as it is against the law to do so. The Federal Reserve is not a bank that is available to any client, period, regardless of their claims. This means that the FED cannot receive funds on deposit, cannot issue POFs, and cannot be a repository for instruments and then issue a SKR. Anyone making any of these claims is just lying to you. The Chairman and CEO of Bank Holding Companies do NOT sign any bank documents, including BGs, MTNs, CDs, SLC, Certificates of Gold Deposit or SKRs. This is all just the nonsense of brokers that have fabricated fraudulent documents and are trying to pass them off as something real that was issued by the bank. All instruments that are presented for hypothecation must (after the Agreement is signed) move to the funding location. If the instrument is on Euroclear, it must move Euroclear Free Delivery. If the instrument is on DTC, it must move DTC Free Delivery. If the instrument is not on Euroclear, then it must move by SWIFTMT 7XX (depending on the type of instrument). We do not desire to transact on Third-World instruments, as their banks and central banks are problematic and will not perform. However, we will consider these instruments on a case-by-case basis. No one can block an instrument on Euroclear or DTC for the purpose of hypothecation, period. No funding source can take down an instrument from Euroclear or DTC. The instrument must be sent Euroclear Free Delivery or DTC Free Delivery to the funding location, by a bank or securities house officer, acting on behalf of the client. This action cannot be taken by ANY client, period. These procedures are in place for the protection of the actual owner of the instrument. In a transaction involving the buying and selling of an instrument (spot or contract), neither the Seller nor the Buyer are allowed to fabricate the rules and procedures that must be deployed. If the instrument is on Euroclear, then the transaction MUST be completed via the Standard Euroclear DVP Protocol Settlement Procedures, officer to officer, and no other way, period. If the instrument is NOT on Euroclear, then the transaction MUST be completed via the Standard NON-Euroclear DVP Protocol Settlement Procedures, officer to officer, and no other way, period. Anyone with any other procedures is just a broker that has never completed such a transaction and never will and, most likely, does not have the instruments. The Indicative Value of an instrument and, subsequently, the Loan to Value, are determined by the Provider and their Funding Source, not by the clients or the brokers. And, not all instruments have the same Indicative Value or Loan to Value. Do not make the mistake of thinking that the Rating of the issuing bank is the same as the Rating of the instrument, as they are not. The bank and the instrument are rated separately. The Laws of Perjury do not apply to any commercial documents, period. There is no law, act (including the Patriot Act), rule, regulation or ordinance that requires that any buyer of any seasoned instruments must provide a Proof of Funds. This is just the nonsense of the brokers. The Standard and NON-Standard Euroclear Procedures set forth that the validation of capabilities (both sides) is accomplished in the officer to officer call, after the Agreement is signed between the Buyer and the Seller and before the first invoice can be issued. No one is going to pay +2% (or +1+1) for their acquisition of seasoned instruments. This is NOT the requirement of any Seller and is only the greed of the brokers involved. Clients with Cash Funds that want to participate in a Buy/Sell Transaction, have three (3) choices: 1. Move the funds to an account that will be established for the client at one of the Providers Fiduciary Banks; or,
2. Have the current bank block the funds in favor of the Funding Source and then issue a SWIFT MT 760 for this transaction (this option is not available from a U. S. Bank); or
3. Acquire a SBLC from the bank and come forward with the SBLC, not the cash fund.
4. There is no such thing as a Program, defined as the client leaving their funds at their own bank and the trader trading on the funds from the client’s bank and then paying the client hundreds of percents per week. This is all the nonsense of the brokers in this business.
Banks in Mainland China (and other selected countries such as Russia, Taiwan, etc.) cannot send a MT 760 (for cash funds or for an instrument) without applying to the Central Bank of China for permission, on a case-by-case basis, which may take months. While there is a great deal of cash in China, the client cannot move the funds or move an instrument or use a MT 760, without the express written permission of the Central Bank of China. There is no such thing as a Mandate. Something can be mandated, but not someone. The only way that a corporation can pass authority to someone (regardless if they are an officer of the corporation or any outsider) is via a duly issued and authorized Corporate Resolution, signed by the Secretary of the Board and containing the seal of the corporation or the signature of a Notary Public. So, when someone tells you that they are the client/sellers Mandate, all this really means is that they are the broker closest to the client/seller, and not that they have any authority to do anything, period. Banks operating in the Western Banking World do NOT perform undertakings for their depositors/clients, as this would be a violation of banking rules and regulations. This means that the banks are not going to endorse the financial obligations of the client, period. Banks do not endorse Fee Agreements or Payment Orders or guarantee the safe return on an instrument/asset that is the subject of hypothecation. Banks are only allowed to act upon the owned assets of their depositors, and only based on the assets that are in that clients account at that bank, period.
United States Banks do NOT issue MTNs or BGs; cannot send or receive a BG; and, cannot issue a SWIFT MT 760 Securities Houses/Firms are Members of Euroclear and DTC, but are NOT Members of SWIFT. Accordingly, they CANNOT send or receive SWIFT Messages.
The terms FED Program, FED Trader, FED ID Numbers, FED Pool, FED Compliance and Licensed Trader are all just broker-created terms and have no meaning as none of these items exist. If your client has Gold Bullion (Au) and you want our associate group to hypothecate it, the first step is that they must have the bank that is responsible for the Gold Bullion (Au) issue OUR trader's Conformation of Gold Bullion (Au) Letter, with full bank responsibilities. If they cannot obtain this Letter, then we are not going to be interested in the transaction. Further, after the Agreement has been issued and signed, the bank must block the Gold Bullion (Au) to the benefit of the funding party and then send a SWIFT MT 760, bank to bank. And, for the record, Precious Metals Concentrate is not Gold Bullion (Au) and no one is going to hypothecate the Precious Metals Concentrate. The following assets are NOT assets for hypothecation, unless the client has already obtained a Financial Guarantee Bond, from a A Rated or better insurance company or unless the client has an acceptable bank that is prepared to issue a MT 760 as to the value of the asset and issue it with Full Bank Responsibilities: Precious Metals Concentrated, Uncut Stones, Timber, In-Ground Mines, Copper, Coal, Oil and Gas, Real Estate, Land, Non-Rated Bonds, etc. We do not accept or acknowledge any sanitized documents, period. Certain Bonds and Stocks are acceptable for hypothecation, but only if they are on Euroclear or DTC and are rated by one of the acceptable Rating Services (Moody’s, S & P, Fitch). And, just because the Term Sheet says that they are Rated, does not mean that they are Rated. We need to see the Bond on Moody’s screen, and then we know that it is Rated. Corporate Bonds that are issued, but that is not on Moody’s and is not rated, are referred to as Junk Bonds and have no value for hypothecation. The private placement business is mostly composed of brokers who have never closed a deal, and many of them are desperate for money. Over the last few years, these inexperienced brokers have realized two things: they aren’t getting paid on the “big deals” they’re chasing, and there are a growing number of small clients showing interest in private placement that don’t meet the net worth requirements. With most of the brokers having little in their pockets, and a large demand for private placement programs, the bank instrument leasing business was created.
Leasing bank instruments involves the temporary assignment of a bank instrument for an agreed upon fee between the instrument owner and prospective borrower. This is similar to the idea of “proof of funds”, which has been around for years. To summarize, if the owner assigns the funds to a temporary beneficiary, that beneficiary may be able to show these funds for future transactions which require proof of sufficient capital. The problem with this isn’t so much the leasing of the assets, but rather the leasing of the bank instrument. Every time you come across a broker trying to lease bank instruments, the story is always the same. They claim you can enter private placement, access loans, finance projects, and more, all by paying a UPFRONT FEE via Escrow to access a bank instrument. They also claim the instrument will be in your name, and you can do whatever you want with it. Though success in these scenarios is possible, you would have a better chance putting it all on a hand of poker. Think about it, the majority of bank instruments are 100M and more, and are owned by the most affluent individuals in the world. Do you really think they would allow you to use it as collateral for risky transactions, all for just a 5-10% fee per year? No, that would ignorant, and not worth the risk. Let’s take a look at the REAL FACTS: 1. Leased Bank Instruments can RARELY be Used for Private Placement Programs Real private placement programs are regulated by the Federal Authorities, and due diligence is completed by the banks specific to their rules. When a client goes through compliance, the asset goes through compliance as well. If you claim to own an asset on the contract, and it is actually leased, you are committing fraud and the banks WILL find out. In addition, many private placement programs require that you block the bank instrument in favor of the trader via MT 760. Once again, the bank will NOT allow you to block the instrument in another person’s favor, because they can see it is already encumbered by the REAL owner when it was leased to you. 2. You can RARELY Get a Loan against a Leased Bank Instrument, Since you Don’t Own It Can you walk into a bank with your brand new leased BMW, and ask for a loan against it? I don’t think so. They will background check on the vehicle and see you are not actually the owner. This is the same idea with leasing a bank instrument. Since it is an asset, banks must complete their due diligence on it so they know that if you failed to pay on the loan, they can seize the collateral and repair what was lost. If the collateral is owned by another individual who has not signed off on the loan contract, the bank CAN’T seize that person’s collateral, and therefore, the bank would not loan to anyone but the real owner of the asset. In short, your only option for a loan against a leased bank instrument would be from a private lender. 3. MOST Bank Instrument Leasing Deals End Up as Fraudulent Transactions Most of the time there isn’t even a real bank instrument to be leased. The chances of finding a broker who is connected with an individual who owns this specific type of asset is tough, but when you add that this owner also must be willing to lease the asset for a low fee, it is next to impossible to find. Though in theory you can lease bank instruments, the odds are stacked against you to say the least! 4. Bank Instrument Leasing Contracts ONLY Protect the Provider and Brokers When you see a contract to lease a bank instrument, you will notice that there are no representations or warranties made by the providers or brokers. This allows them to block an instrument in your favor with restrictions, and if you can’t use it for anything, it’s your loss. Even though they may have to “deliver” the instrument via SWIFT before the money is released from Escrow, there is no guarantee that this instrument will be delivered properly, or that it will still be applicable to the opportunity you were using it for. In essence, you are taking a BIG gamble, and if the provider of the loan, service, or private placement program doesn’t perform, (which is usually the case) then you are out the full fee. 5. Leasing Fees DON’T Even Make Sense Compared to the Risk for the Owner Most brokers who try to lease bank instruments charge an upfront fee, and claim that the instrument owner is getting most of it. This fee can be 5-15% of the face value if the bank instrument is leased for a year. Let’s take a step back and think about this for a second. If you were the owner of a bank instrument worth 100M, would you really risk transferring it for only a few percent a year? Once again, I don’t think so. As the owner of the instrument, you already get 6%+ per year on the coupon, so it’s not like you need the extra cash. As you can see, even though it doesn’t make sense to lease instruments, brokers are still pushing these deals because they hope that they can get commissions. While the dollar signs are blinding them, they lack the interest to complete due diligence on the provider, which leads to an unsafe transaction for the client. Unfortunately, we have spoken to 100’s of individuals who have fallen for this, and now most are out several hundred thousand, if not millions of dollars. The moral to the story is: use common sense, not hope when trying to complete private transactions. As you may see, we have mentioned this in many other articles, and it’s truly the KEY to mitigating your risk. Though leasing liquid assets and “proof of funds” is a viable strategy, leasing bank instruments, in our opinion, is a sure avenue to disappointment. Stay safe, and diligent. Understanding Bank Instruments, from Bank to End Investor
With so many people trying to broker private placement programs and bank instrument sales, we felt that it was critical to outline the entire process from instrument creation to maturity.
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). WE ACT ON A CONSULTANCY/LIAISON BASIS ONLY. INFORMATION GIVEN / FORWARDED IS FOR INFORMATION PURPOSES ONLY AND IS SENT BY SPECIAL REQUEST AND DOES NOT CONSTITUTE A LEGAL AGREEMENT. THIS INFORMATION IS **IN NO WAY** AN OFFER OR INVITATION OR SOLICITATION TO INVEST OR TO BUY OR SELL. ANY AUTHORISED ENTITY OR INDIVIDUAL(S) IN RECEIPT OF THE ABOVE SHOULD TAKE PROFESSIONAL ADVICE AND CONSULT THEIR OWN LOCAL / NATIONAL AUTHORITIES TO ENSURE THAT THEY ARE COMPLIANT WITH RELEVANT RULES ANDLAWS.* THIS MESSAGE CONTAINS INFORMATION . WHICH MAY BE PRIVILEGED OR CONFIDENTIAL. THE INFORMATION IS INTENDED TO BE USED FOR INFORMATION PURPOSES ONLY AND BE AWARE THAT ANY DISCLOSURE, COPYING, DISTRIBUTION OR USE OF THE CONTENTS OF THIS INFORMATION IS PROHIBITED.. THE INFORMATION PRESENTED HERE IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED AS A SOLICITATION OF FUNDS OF ANY SORT, AND IS INTENDED FOR INFORMATION AND GENERAL KNOWLEDGE PURPOSES ONLY. |
