A Tutorial On Managed Buy/Sell Private Placement Programs: Chapter 4
By Michael Weiner
 PROCESS SUMMARY
The following is a summary of the process involved for entering a PPOP:
A client with a minimum of €200M applies for a Private Placement Opportunity Program.
This business is entirely private. To get access to these investment programs, the client needs to send his preliminary documentation to a broker whom the client trusts to be in direct contact with the trading group. That means a Client Information Sheet, a copy of their passport, and a bank statement showing the balance of funds being committed for trade. It is generally required that the bank statement be signed by two authorized bank officers to make it full bank responsibility. There is no other way for the client to get contact with the trading group.
After the client has sent his own paperwork (their Passport, Client Information Sheet, and recent bank statement showing cash), the trading group will investigate the applicant. If the response is positive, the program manager in the trading group will contact or meet with the client. If the investigation is not favourable, the program manager will contact the broker and tell him that the client did not qualify.
During the contact with the client, the trader will explain the program terms/conditions to the client, and outline the guarantees and requirements to start the program. The client will get instructions to open a new sole signatory bank account at the trading bank for transferring the funds there.
The client will receive a contract which states the total gross yield, the percentage of the gross profit reserved for projects, the percentage for the trading group and the percentage for profit participation fees to be deducted for brokers/intermediaries. The net return to the client will be wired to another account that can be located in any bank worldwide. If the client accepts the contract, the contract is signed and the program is ready to start.
The trader is now able to leverage the client's reserved money 10 times, and is now able to back up the arbitrage transactions with that money, a credit line that remains in the bank account that is screened before each arbitrage transaction. Trading now continues, and the profit is paid out per the contract terms to the client.
The programs work with cash only or gold bullion. This fact means that the client will only be accepted with liquid funds. Recent rulings by the G20 prohibit the use of an asset other than cash or gold bullion in a bank vault. A line of credit must be established and drawn down into an account at a bank, where it is lodged and blocked.
About the Author
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| Michael Weiner, PreConstruction Catalysts Inc
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