The investor in a Private Placement Program is just a cog in the over-all picture among many others. So, who are the other players that are involved in a PPP? Well, they include the trading groups as traders/commitment holders, top world banks who issue bank instruments, intermediaries/brokers and of course, the exit-buyers such as pension-funds/insurance, etc., who get the advantage to benefit from this private placement program trading.
Some think that the investors in private placement programs are the end-buyers in the chains we spoke of before, but this is not the case. Financially strong companies who are looking for safe investments for the long term are the actual end-buyers.
The end-buyers are made up of insurance companies, trusts, pension funds, etc. They are not allowed to participate in-between as investors.
This sometimes causes some discomfort for an investor because he/she usually does not see most of those involved in the process because they will deal with brokers, trading groups / traders and trading banks only. Different clients have varying levels of comfort regarding their financial security in this kind of trading.
Investors are “invited” to participate only after they have submitted a full compliance package which includes a POF (proof of funds), CIS (client information sheet), passport copy, a brief summary describing the request, i.e the dollar amount, is it PPP or another service they request, the name of the client’s bank and is it cash or a bank instrument that he wants to put into trade? Also, in what country is the client and the bank located?
A lot of intermediaries/brokers and clients try to pester the trader or his representative with questions and want to go back and forth and get all of their ducks in a row before submitting their compliance package. Many have a rude awakening when they are told to go elsewhere. This often occurs with unsophisticated players who do not understand the protocol involved in private placement programs.
They just don’t give out details until you can show you are a real client. They are too busy helping the many humble and responsible people who are waiting in line to get into good trades to deal with multiple questions and difficult personalities and bad attitudes. Once they review the compliance package and it has passed their due diligence, the client will be invited to participate and full details will be revealed at that time. This does not commit the client to anything because he has not signed a contract. After a conference call, it is up to the client to move forward or not.