financial product offered by banks to account holders who agree to leave their funds on deposit for a pre-defined period. This allows investors to collect a higher annual interest, while securing their money in a low risk venture.
DTC provides clearing, settlement and information services for equities, bonds, securities, money market instruments and over-thecounter derivatives. This medium is used in private placement programs to transfer/assign assets to a trader, from an investor
An agreement between two entities outlining compensation, fees, and the
obligations of both parties in relation to a specific business venture. This is the most common legal structure for private placement programs.
In some cases, this form will substitute for the client information sheet. Just like the CIS, it requests contact details and other related information. Also, this phrase is used when referring to the “Know your Client” law, which many investment markets enforce. It states that you must know your client well, and unless deceived, you can incur certain liabilities for future problematic actions of the client.
letter provided by investors interested in a private placement programs, defining their unsolicited interest to enter the investment transaction. This
document can also be used for areas outside of private placement, specially where solicitation laws apply.
This is the loan value that a bank/lender will provide after evaluating an assets worth. Usually, this is used for hard/illiquid assets, and is stated in % in relation to the asset’s appraisal value (Loan/Appraisal Value = LTV %).
(Non-Circumvention, Non-Disclosure Agreement): An agreement between two parties defining the boundaries and limitations of their relationship. Typically, this agreement is used by private placement brokers to “protect” from future circumvention.
The process of allowing another individual to temporarily show your assets as their own, with the fee dependent upon the time it’s utilized. Also, this phrase can refer to a bank statement, or other financial document, proving the assets of a prospective investor.
A formal description of an investment opportunity which is created to comply with various federal securities regulations. This outlines all details of the “private placement” offered, as well the obligations of both parties involved.
Phrase used by private placement brokers confirming the readiness of an investor to satisfy requirements, and more forward with an opportunity. This statement can also be made in the form of a document, which some programs may require.SBLC(Standard by letter of credit ) : A document issued as a guarantee of payment by a bank, on behalf of a client. This is used as “payment of last resort” if the client fails to fulfill a contractual commitment with a third party. In the private placement world, this term is often associated with fraudulent companies that offer bank instrument leasing and/or project funding “opportunities”.
A document issued as a guarantee of payment by a bank, on behalf of a client. This is used as “payment of last resort” if the client fails to fulfill a contractual commitment with a third party. In the private placement world, this term is often associated with fraudulent companies that offer bank instrument leasing and/or project funding “opportunities”.
This is a term used in any real private placement contract. It states that the
trader, or investment manager, will use their best efforts to achieve high profits. For example, a contract may say “profits will be achieved on a best efforts basis”.
Also known as a “daisy chain”, this frequently used term describes the
“layers” of brokers that one must go through before they reach a trader. Unfortunately, there are usually several private placement brokers involved in any deal.
An individual/institution who is contractually obligated to purchase a bank instrumentat an agreed upon value. Without “prior commitment”, the seller of the bank instrument would never have purchased the note because their intent was trading for profit. This term is also similar to the phrase “exit buyer”.
Term referring to a bank which creates, issues, and backs discounted bank
instruments. The instruments are “cut”, and sold to traders at discounts, who then sell them at a higher price to “exit buyers”.
The idea that bank instruments can be purchased at a discount from face value, leaving the opportunity to profit from resale, or the difference between face Due Dilligence: Phrase referring to the process of qualifying people by verifying and investigating their background. This is used mutually by private placement traders and investors.
An escrow service is a licensed and regulated company that collects, holds, and sends money, according to conditions specified by both the customer and service provider.
Once the conditions of the customer are met, funds are immediately released to the service provider. Typically, in the private placement business, escrow is used to pay upfront fees for “sketchy” services such as leased bank instruments, funding opportunities, and others.
The world’s largest settlement system for securities transactions, covering bonds and equities, as well as bank instruments. This important and efficient medium allows transactions to be completed remotely, while ensuring safety for both the buyer and seller of the asset.
This is a word that should NEVER be used in any investment niche, especially one as volatile as the private placement market. Though it may not seem like a key term, it is for one VERY big reason. Any broker or trader that “guarantees” certain profit amounts is breaking the law, and will NEVER fulfill their claims.
Land areas which have been appraised based upon geological assessments of the assets which lie beneath. Many in the private placement business try to enter programs with land containing precious metals, energy materials, and more. Unfortunately, most have no luck due to the current worldwide liquidity crisis, and the high excavation costs to isolate the asset.
A bond issued by a company or institution which has poor financial integrity, making the bond effectively worthless. Some examples which private placement brokers may encounter are: Venezuelan bonds, Brazilian bonds, gold bearer bonds, certain corporate bonds, and many others.
This phrase refers to a transfer between two accounts held by the same
bank. For example, a trader may have an HSBC account, and send the profits to a client with a different HSBC account. This is far more efficient, and avoids possible problems associated with external transfers.
This is an improved version of the original swift MT 100, which is similar to a wire transfer. Though it is a direct transfer, the MT 103 has a large number of options which describe conditions and instructions for how the payment should be made.
An individual elected by intermediaries who will accept all commission
payments on a private placement transaction, and then distribute them in accordance to the agreement between the parties. This can be an attorney, one of the brokers, or anyone else the intermediaries feel comfortable with.
A bank instrument which has been traded, having more than one owner
over its lifespan before maturity. This is usually a bank instrument which is discounted moderately, sold at a value of 70-85% of face.
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