Few Important Questions & Answers Related To PPP/PPO


1.  What is the Private Placement Program or
     the Secured Asset Management Program?

The Private Placement Program or the Secured Asset Management Program is an investment commonly used by the very wealthy where the principal investment is fully secured through a BLOCKING OF FUNDS ARRANGEMENT (MT 760) with the investor's bank.

2. What kind of assets may be eligible under the program
     and may be subjected to the blocking of funds arrangement ?

The following are eligible for blocking of funds arrangement under the program:
1. Cash Deposits (US Dollars & Euros)
2. Certificates of Deposits
3. Bank Guarantees issued by top international banks
4. Stand-by Letter of Credit issued by top international banks
5. Gold Certificates of Deposit
6. Commodities (Oil, Natural Gas, Precious Gems, Diamonds, etc..)
7. Collateralized Mortgage Obligation
8. Medium Term Notes
9. Treasury Bonds

3.  Is the investor putting his principal at risk under the program?

There is no risk of losing the investor's principal investment. The principal investment remains blocked for a specified period in the investor's bank, ownership of the account remains with the investor, and funds blocked will not be moved, transferred or withdrawn during the period of blocking as specified.  There are no up-front fees, no lien and no mortgage on the client's asset. Client's asset remains free of any encumbrances at all times.
After the investor's funds are blocked, the PROGRAM DIRECTORS will put up, through their own credit facilities, counterpart funds equivalent to the hypothecated value of the blocked funds, to be utilized for trading purposes.
The investor is guaranteed by the PROGRAM DIRECTORS, by contract that they will receive what is in effect, a guaranteed percentage paid on a periodic basis upon terms as set forth in the contract.

4.  What kind of instruments will be transacted under the program?

The instruments to be transacted under the BUY / SELL PROGRAM are fully negotiable bank instruments delivered unencumbered, free and clear of all liens, claims or restrictions. The instruments are debt obligations of the top one hundred (100) world banks in the form of Medium Term Bank Debentures of ten (10) years in length or Standby Letters of Credit of one year in length with no interest but at a discount from face value. These Bank Instruments conform in all respects with the Uniform Customs and Practice for Documentary Credits as set forth by the International Chamber of Commerce, Paris, France (ICC) in the latest edition of ICC Publication Number 400 (1983 Revision) and the newest implemented ICC Publication 500 (1995 Revision).
It must be stressed that, before an instrument is purchased, a contract is already in place for the resale of the Bank Debenture Instrument.  Consequently, the PROGRAMMER'S funds are never put at risk. More so, with the investor's funds which remain blocked in the investor's bank in the duration of the contract. The trust account will always contain funds or Bank Instruments of equal or greater value.

5.  What is the duration of the program?

Operations will take place approximately forty (40) International Banking Weeks per year with specific transactions taking place approximately one or more times per week depending on circumstances.  Although there are 52 weeks in a year, there are only 40 international banking weeks during which transactions take place. An international banking week is a full week which does not include officially recognized holiday. However, this does not preclude that transactions may occur on short weeks that have a holiday.

6.  Why are these "high returns with safety"
     PROGRAMS not generally publicized?

The answer is that these programs have been available, though not widely known for years. However, because of the extremely high minimum requirements to enter them, only a few could qualify. The minimums have been 50 to 100 million dollars previously.  Only recently have the smaller minimums been available so that more can qualify and yet have the opportunity to earn exceptionally high and safe profit yields. Also, the INVESTOR must be "invited in" to participate in these very limited enrollment programs. Individual programs can quickly become filled and are then closed to further investor participation.
The international trading of these banking instruments is a privileged and highly lucrative profit source for participating banks, and as a result, these opportunities are not generally shared with even their very wealthiest clients. It would be difficult, at best to entice investors to purchase Certificates of Deposit yielding 2.5% to 6% if they were aware of the availability of other profit opportunities from the same institution, which are yielding much higher rates of return. The banks always employ the strictest non-disclosure and non-circumvention clause in trading contracts to ensure the confidentiality of the transactions. They are rigidly enforced, and this further accounts for the concealment of these transactions from the general public. Participation is an insider privilege.
As a result, virtually every contract involving one of these high-yield bank instruments contain explicit language forbidding the contracted parties from disclosing any aspect of the transactions for a period of five (5) years.

As a result, there is difficulty in locating experienced individuals whom are knowledgeable and willing to candidly discuss these opportunities and the high profitability associated with them, without severely jeopardizing their ability to participate in further transactions.

7.  How will the entire transaction become profitable?

As is quite evident from the foregoing, the key to profitability of these Bank Instruments lies in having the contacts initial resources, and where withal to purchase them at the level comparable to the issuing bank, and thus receive the maximum discount while also having the necessary resources and contracts to negotiate the instruments to the most profitable level of the retail or secondary markets. As one might imagine, those contacts are most zealously guarded by those traders regularly and commercially involved with these instruments. As a result, the real secret of successful participation lies in not the how, why and wherefore of these transactions, but and more importantly, in knowing and developing a strong working relationship with the "Insiders", the principals, bankers, lawyers, brokers, and other specialized professionals whom can combine their skills and run these resources into lawful, secure and responsible programs with the maximum potential for safe gain.

8.  Does the program adhere to generally
     accepted international business practices?

The truth is that there is no smoke and mirrors involved. All of the programs are conducted under the specific guidelines set up by the International Chamber of Commerce (ICC and your local Chamber of Commerce is not affiliated), under its rules and regulations generally known as ICC 500. The ICC is the regulatory body for the world's great Money Center Banks in Paris, France. It has existed for more than 100 years, and exerts strict control on world banking procedures.

9.  Can we avail of this investment opportunity
     direct through the banking industry?

The vast majority of U.S. citizens have not been made aware of the money making opportunities already available for fifty years to qualified European Investors through ICC-affiliated banks. However, it should be pointed out that a few major U.S. banks do participate from within their banking operations based in Switzerland and the Cayman Island, but they do not normally make their programs available to Americans living in the United States, and the chances are very great that your local branch manager has absolutely no knowledge of them, and may even deny their existence.
The banks themselves are NOT allowed to take part in the management of the programs, this would lead to a massive cartel generating huge unregulated profits. The banks do, however, manage to make substantial profits from the program in the form of fees. Program management is the job of the Providers, and there are only a few of them in all the world-wide banking industry.

There is a variety of arrangements available for investors to place their funds in trading programs. Each program is different; however most offer a contractual minimum return or a fixed yield per trade with a set minimum number of trades per year to the investor. 

1. Direct Programs: Most often this involves a direct engagement of the investor’s funds for the trading program.  Trades take place within an investor transaction account which grants the program’s trading manager a “limited” power of attorney to conduct trades.  Because of a high “perceived risk” these programs offer very high returns.

2. Indirect Programs: The program’s trading manager secures a line of credit or loan by utilizing the investor’s funds.  Proceeds from this loan are employed to pursue a trading program in the name of the trading manager.  The investor’s funds are unencumbered by the loan and thus are never placed at risk because of special arrangements between the trading manager and the bank at which the funds are deposited.  These programs offer full security and produce medium to high rates of return.

Institutional Trading

Debt instrument trading is a multi Trillion dollar industry, worldwide.  Top world banks, also know as Money Center Banks, have been authorized to issue debt instrument block such as Promissory Bank Notes or Mid-Term Notes (MTNs), Stand By Letters of Credit (SBLCs), Bank Purchase Orders (BPOs), Bank Debenture Instruments (BDIs), or Zero Coupon Bonds (Zeros) under the guidelines set forth by the International Chamber of Commerce (ICC – 500 & 600).  Quoted prices of these instruments are a percentage of the face amount, and the initial market price being determined when first issued.  As these are resold to other banks for a profit, the price continues to increase with each transaction.  A transaction can complete as quickly as one day.  Trading cycles generally progress from the higher bank levels to lower (or smaller) banks as these debt instruments are bought and sold within the banking community.  Seven or eight trading cycles are not uncommon, until they are ultimately sold to a predetermined retail customer (exit buyer) such as a security dealer, a pension trust fund, foundation, insurance company and so on that seeks a suitable yield on an investment for these amounts.  The bank debentures are selling at a substantially higher price by the time it reaches the “retail” or secondary market level as when it was originally issued.  For example, let’s say the original bank issued a “MTW” at 80% of face value, by the time the “retail” or “exit” buyer obtains it the selling price could be 91% to 93% of face value.  These transactions are meant for large financial institutions which is why the face amounts are generally US $10 million and greater.

Investor Risk

Investors’ initial reaction to learning about the opportunity to earn high returns is generally to assume that the risk must by proportionately high as well.  Otherwise, everyone would be participating in such a program.  However, properly structured Bank Credit Instrument trading programs place virtually no risk upon the investor’s capital.  Meaning that methods of reducing risk differ depending on the type of program and include:

  1. The investor retains sole signatory rights, without encumbrances, on the account as funds are deposited in the trade bank in the investor’s name.  Funds are held in the bank throughout the investment.  Neither the Program Manager or the Introducing Broker have access to the investor’s funds.
  2. The Bank or the Program Manager is granted limited power of attorney by the investor, authorizing the purchase and resale of specific types of bank instruments from a specific group of banks, (i.e. A-AAA rated, top 25 European, etc.).  There are no other powers authorized under this agreement.
  3. The Bank offers a traditional instrument such as a Bank Guarantee, Treasury Notes or Certificate of Deposit to be held in their custody. Generally, these instruments generate a moderate rate of return in interest at maturity (commonly one year and one day from the initial deposit) as well as profits that may have been earned from the program's trades. A safekeeping receipt is presented to the investor at the time of the initial transaction.

In transactions, such as "direct programs", where the investor takes possession of the credit instrument, ownership generally is no more than a few days and usually only a matter of hours before they are resold. Credit instruments such as these typically maintain a fairly static prices and are virtually unaffected by market conditions.
Why isn't everyone investing in these programs, since they are so secure?
Here are some of the reasons why:
  • First, there is a significant barrier to entry in terms of cost. These programs are generally for large investors and typically have minimum transation amounts of $100 Million USD or more.
  • Program Managers and Investors are bound to very strict confidentiality agreements by the banks.
  • These programs are predominately operated by top European banks or domestic branches of top European banks, greatly limiting access for U.S. citizens and are also more difficult to research.
  • Investors respond to "perceived" risk rather than actual risk. The "perceived" risk of investments that are not well known can be seen as quite great, even though the actual risk might be very low. This perception is particularly so when transactions are conducted only by specialized departments, that officers in other departments are completely unaware of, especially in the United States.
  • There have been highly publicized cases of fraud that the SEC and Federal Reserve have issued warning about. To our knowledge, no instance of fraud has ever been found in programs which employ the secure procedures that we have outlined here. Fraudulent activities are connected to situations where the investor gives up control of funds to bogus trade managers with Ponzi scheme payout schedules.
  • Risk to the principal can be eliminated entirely; however profits are not guaranteed to be fully earned. Potential dividend or earnings loss from initial investment until the first payout can happen in some programs. Usually this is only a two to three week period of time, but can be as long as eight weeks for smaller investors. A Bank Guarantee is often used to offset this risk factor by offering a minimum return to the investor.
  • It is difficult to find good programs and time consuming to verify. There are perhaps hundreds of programs offered annually. Unfortunately there are a lot of non-existent repackaging of the same programs by several different groups. When reviewing a program's procedures you should ask yourself this paramount question: "How is my principal being protected from loss in this program?" The answer should be complete protection. If so, you have a well-founded basis for moving forward.