Important Caution: This website is not for American investors
to read or use, because (i) in my 25+ years in this practice I have found that
American investors are too provincial and unsophisticated for this type of
investment, (ii) more importantly I do not want the website misconstrued as an
offer of securities to an American or anyone else…as it is not, and (iii)
the European banks that are involved in these type of transactions will usually
not work with Americans.
Thank
you. …Robert
Townsend
THE MISUNDERSTOOD WORLD
OF PRIVATE SECURITIES TRADING
Robert Townsend
Attorney At Law
(See Notice of Disclaimer At Bottom of Page)
NEW ALERT! Effect of Global Economic Crisis on
Private Securities Trading. The
availability of transactions for investors increases during economic times like
this, and thus there are even greater opportunities for profits. Remember! The investor receives the profits
from the “matched trading” of bank instruments, and the investor
does not hold these bank instruments and have the risk of bank failure
of the issuer (the window for completing the transaction is very short). An example of an interesting opportunity
for a $100 million investor is a 60% return on a 90 day investment, which
includes an invitation from the transaction bank. This is just an example to show that in
these economic times banks are seeking new funds through this financing route.
Overview
Ø
There are many versions of private securities trading
investments, and they usually involve the buying and selling of bank
instruments with an acceptable bank that provides written safeguards of the
principal investment.
Ø
Customarily, the investment funds are placed in the
investor’s account at an investor-acceptable transaction bank where the
bank instruments are bought and sold from the investor’s account. Investor is the sole signatory to that
account.
Ø
Each transaction is different as to length of term and
the profit on sales of instruments, so it is impossible to quote a return on
investment until the investor meets and reviews the particular transaction with
the trader and the transaction bank.
Some transactions are as short as 30 days, while others may last as long
a year or more.
Ø
The investor can remove the principal at any time, though
few are inclined to do so.
Ø
Transactions of this type taking place in
Ø
Do not confuse these investments with HYIP or high yield
investment programs; those are all fraudulent.
------------------------------------------------------------------------------------------------
DO PRIVATE SECURITIES
TRADING PROGRAMS EXIST?
§
Yes. They exist
and investors earn millions of dollars (or Eros) each year. DO NOT CONFUSE PRIVATE SECURITIES
TRADING WITH HIGH YIELD INVESTMENT PROGRAMS (HYIP) WHICH ALSO EXIST, BUT EXIST ONLY
AS FRAUDULENT TRANSACTIONS.
WHAT DO
PRIVATE TRADING PROGRAMS GENERALLY LOOK LIKE?
1. Pay High Returns.
a. These
investments pay a high return on investment.
b.
However,
there are many factors that go into establishing the rate of return such as the
discount on the instruments, market conditions, length of trading period,
etc. Therefore, until the investor
meets with the trading entity that has access to the securities that are to be
purchased and sold, there is no way to determine a rate of return. DO NOT LISTEN TO ANYONE THAT QUOTES A
RATE OF RETURN, AS IT IS IMPOSSIBLE TO KNOW UNTIL THE TRANSACTION IS SET BY A
MEETING BETWEEN THE INVESTOR, TRADER, AND TRANSACTION BANK.
c. They
do not pay the exorbitant and
unrealistic sums promised in fraudulent HYIP and “buy-sell deal”
investments. [Investors have often told me they would not invest in any transaction for a mere return of 60%
to 120% per annum, because they have been told by the HYIP brokers that they
can earn 100% a month…sometimes
per week. This is only one example
of the damage that HYIP brokers generate with their nonsense.]
2.
Safety
of Investment
a. Each investor has to determine to its own
satisfaction whether or not the particular investment meets the investor’s
safety of investment standards.
b. Many
(but not all) of the transactions have “matched trading”
requirements that are monitored by a bank.
This means that under a written undertaking a bank monitors the use of
the investor’s fund to make sure that the funds are only used for
“matched trades”. The
idea is to endeavor to make sure that the investor’s funds are only used
for “profitable” trades, which is a significant safety factor.
c. Definition of “Matched Trades”. If you are unfamiliar with the term
“matched trades”, this simply means that (i) the investor’s
funds are only used to purchase
securities (ii) for the account of the investor (iii) when there is a buyer
standing by confirmed by a bank and ready to purchase those securities at a profit (iv) from the account of the
investor.
d. There
are never any representations made that the transactions are either
“risk-less”, “not at risk” or “minimal
risk”.
e. In
my experience, finding acceptable safety has never been a problem once the
transaction is fully revealed to the investor.
f. SAFETY RULE: The safety rule I require for my investor clients is
that at all times my client’s funds are either (i) under his
sole control or (ii) he has a written bank commitment that protects the funds
to our satisfaction. I am not
referring to a promise of a trader, as this is usually a fraud and not
worthwhile; there must be a written commitment from a reliable bank. Sample application of rule: In a “Matched Trade”
situation, the client basically has a written commitment from the bank
handling the transaction (and the bank is getting paid well for it) that the
client’s funds will only be used for matched trades.
g. An
investor is not going to invest unless he is satisfied on entering into the
investment agreements that the risk factors are acceptable. That is all there is to it.
3.
Excellent
Banks Involved
a. Though
often the banks are not the largest banks, the transactions utilize excellent
and substantial banks. The investor
has the final acceptance of the bank used.
b. The
banks are in Europe and Hong Kong
and (i) the investor is always required to travel to the
bank to conduct due diligence on the transaction and open an account in his name, and (ii) the investor is always required to transfer the
investment funds to this account (NO exceptions!).
c. I
have never seen a transaction using banks inside the
4.
Simple
Procedures
a. Usually
the investor is confirmed as having the funds, and then the investor is
introduced to the trading entity and they work out the details directly between
them.
b. If
it more complex than that, there is a broker screwing up the deal and it will
usually fail.
5.
No
“One Year” Contracts With 40 Weeks of Trading
a. The
term or length of time of these transactions is determined by the availability of
instruments to trade. There may be
sufficient instruments to last three weeks or twelve months of trading and
sometimes much longer. Each
transaction is different.
b. The
most difficult element to make these transactions work is the ability of the
trading entity to obtain the instruments to trade, and as the supply is
limited, the number of people who can obtained them is even more limited.
c. If
you see investments that require a one year (and sometime and extra day)
commitment and mention 40 weeks of trading, this is a fraud.
6.
Bank
Instruments Traded
a.
Often the bank instruments that are traded
by the investor and the trading entity are medium term notes, collateral notes,
and structured notes. The banks
issuing these notes can be of any rating; however, the trading entities in
which I have been involved have restricted their trading to AA rated or A rated
instruments. In my experience these
investment do not necessarily involve AA rated medium term notes (MTN’s),
but often other bank instruments or lesser rated MTN’s.
7.
Minimum
Investment
a. For
private securities trading, the minimum investment is usually $100 million. But
these minimum investment figures change from time to time. From time to time I will see lower
minimums, but $100 million is the norm.
Check with me for lower minimums.
b. The
maximum investment in my experience has been $500 million. (And these
are usually EXCEPTIONALLY good deals!)
c. If
you see a higher amount than $500 million and into the billions, be suspicious!
d. One
more time! If you see a proposal
for under $10 million and it is an
HYIP, IT IS A FRAUD!
8.
No
Nonsense Documents
a.
No letter of intent or confidentiality
agreements are required in most situations. These are broker
documents…not transactional documents.
b.
However, the investor always has to
provide a confirmation of availability of funds before he is introduced
to the trading supervisor and the bank where the transaction takes place.
9.
No
Secrecy Involved
a. There
is no secrecy involved. Secrecy is
only to protect brokers…not move the transaction forward.
b. There
is no domestic or international monetary agency involved; e.g. no Federal
Reserve, World Bank, International Monetary Fund, etc.
c. There
are no humanitarian purposes involved or required.
d. These are simply private transactions between an investor, a trading entity, and a highly respected bank.
10.
References
of Success
a.
For most private securities trading transactions
there are no references of success from previous investors available. If you want a reference from Merrill
Lynch on one of their successful $100 million investors, walk in and ask to
meet that investor, and I assure you that Merrill will not introduce you to
him/her. But a reference is not
really necessary, because once the investor and the trader talk on the phone
they will each give to the other their respective banking coordinates. Then the trader’s bank will call
the investors bank and ask if the funds are on deposit and the investor’s
bank will ask if they trader’s bank can vouch for the reliability and
experience of the trader. When both
responses are in the affirmative, they move on to set up a meeting. Note the funds are never transferred to
the account of the trader; funds should always be in an account where the
investor is the sole signatory.
11.
Intermediaries
Really Get Paid
a.
The intermediaries’ commissions usually do
not exceed 10% of the amount earned by the investor.
b.
Unlike HYIP and “buy-sell deals”,
the “novelty” of these commissions is that they are in fact
paid, and intermediaries earn millions of dollars. In transaction in which I have observed,
the banks and the traders involved insist that the counsel set up the documents
for the intermediary to be paid, because they do not want the intermediaries
compromising the transaction if they become disgruntled.
c.
Intermediaries must serve as
“finders’ and after signing a fee agreement, they have to step back
and not participate in the transaction at all other than being paid
their finder’s fees.
d.
They are usually paid on subsequent transactions
of the party they introduce, so investors should be aware of this fact.
e.
Intermediaries should read my article on
being a broker in HYIP transactions. WHAT
INTERMEDIARIES SHOULD KNOW
ABOUT THEIR INVOVLEMENT IN HYIP DEALS
12.
Introductions To These Type Transactions
a. If
qualified investors want an introduction to a private securities trading
transaction, it is not easy to achieve, because there are too many naïve
or fraudulent brokers who represent that they can get the investor to the
“holy grail” of profit.
b.
IMPORTANT NOTE: You will
never be introduced to a private securities trading situation without FIRST
providing a confirmation of availability of fund. There is no getting around
it! Funds have to be confirmed
before the powers that be will talk with ANY investor.
13. “Grandfather
Intermediaries”
a. Never
heard of them? Do not be
surprised! Some situations come to
an investor with long standing finder commitments in place. These are a result of the first time,
for example, that the Grandfather Intermediary introduced me or my client to a
trader. Sometimes this happened
years ago. In that transaction
there was a continuing intermediary fee for all subsequent transactions. That obligation is honored by the
traders.
b. So on some transactions, an investor should be prepared to pay a Grandfather Intermediary fee, sometimes at most 8% of the investor’s collected profits…usually less.
Frequently Asked Questions about Private
Securities Trading
a.
If these
transactions are so profitable, why doesn’t an investor just stay
invested all the time and make these great returns?
§
Each transaction stands on its own, as the availability
of instruments is limited in each transaction, and consequently an investor can
invest only when there are instruments available to trade. Investors who have participated in other
transactions are the first investors called for the next transaction. That is
why the traders and banks involved do not have any problems of finding
investors, as they have available for new transactions their own investor pool
of previously satisfied investors.
b. Why haven’t big corporations like General Motors invested in these transactions?
¨
First, I do not know that they have or have not
invested in PST transactions.
¨
But from my experience over many years, I have
observed that it is very difficult to get approval of Boards of Directors or
Finance Committees as they jointly and individually are very skeptical of
investing outside the traditional investment markets. They want to invest
in what they know with whom they know e.g. Wall Street.
¨
Another prime reason is for due diligence
purposes individuals are easier to deal with than potential corporate investors
with all the inherent bureaucratic impediments.
c.
Why Are
Some Investors Not Accepted to Invest In these Transactions? Over the
years I have seen people with qualified funds be rejected for entry into these
type investments. Here are a few of those reasons:
¨
In general, most investors are rejected because
through their own pure ego and stupidity they cannot psychologically make an
attitude change. They cannot get
themselves out of the “mind frame” of, “He who has the gold
makes the rules.”, and because they have the money they feel that they
will make the rules. It does not
work this way in these type transactions.
They do not understand that that the “gold” here is not
their money, but rather the “gold” is the availability of the
instruments to buy and sell, and the trading entity has the
“gold”. People with
“bull in a china shop” personalities are uniformly rejected,
because the powers that be do not want to deal with these type people as they
lack the sophisticated ability to learn and listen. This is particularly true where
accountants and lawyers are brought in by second generation money, as this is a
combination for “no deal” to occur. The accountants and the lawyers are
limited in really having the intelligence to listen to subject that they cannot
pontificate on, except to ignorantly say “no”, and the
second generation money people usually do not have the sense to listen to
something they have not heard about (as they think because they inherited money
they know how to earn it and that they do not have to listen to anyone). I know of a situation where one of these
second generation guys would not listen because he “knew it all”,
and all he had to do was to confirm funds and travel to a bank less than a mile
away and confirm the deal that famous bank and make another fortune. Investment bankers are pretty closed
minded about anything they have not heard about, as well. Traders usually do not want to waste
their time with this group.
¨
KEY! The investor should be of the mind set
that he is entering negotiations on a business transaction. No one is trying to sell an investment
opportunity. The distinction
between a “business transaction” and an “investment
opportunity” is EXTREMELY IMPORTANT to understand thoroughly, and if the
distinction is not understood the result will be rejection.
¨
Some potential investors want a guarantee by a
bank that they will not lose their money.
This is an idea that illiterate brokers have passed on to them. These investors should invest in
CD’s as that is the only place I know where such a bank guarantee is
issued.
¨
Investors from
certain geographical areas and religious groups that involve terrorism funding
possibilities are routinely rejected.
¨
Investors from
countries that have a reputation for being irresponsible in financial matters;
e.g.
¨
Sometimes the potential investor wants to know
what bank will be involved, or what securities will be sought and sold. This is only revealed by the trading
entity at the time the investor and the trading entity and the bank involved
meet.
¨
People will not move their funds, because they
have been erroneously advised by incompetent brokers and fraudsters that they
can buy and sell bank instruments without moving their funds from their own
bank. Try and buy anything (e.g.
securities, a car, a bag of groceries) by telling the seller that you have
money in the bank but you will not move it to pay them.
¨
Sometimes people are unwilling to confirm
availability of funds and/or to travel for a meeting to discuss entering
a transaction. A good businessperson will see a potential opportunity and
do what is necessary to seek it out, learn about it, and make a decision to
enter or not enter the deal.
¨
When someone refuses to confirm availability of
funds, it is a 99% chance that there are NO funds because we are dealing with a
broker and/or a fraudster.
d.
Can You Use Private Securities Trading as a
Fundraising mechanism for churches and non-profit organizations?
¨
Private securities trading can be an unusual
source of extremely high revenues for non-profit organizations such as
churches, foundations, charities, etc.
¨
But the churches and non-profits must be careful
with regard to fraudulent schemes, particularly when the scheme is introduced
by a member or leader of the entity.
I will analyze any proposed transaction for churches and non-profit
entities for no charge. Also read,
“Ponzi Schemes In A Nutshell”,
as there is an important segment on churches and Ponzi Schemes.
Who is Robert Townsend?
§
I am Robert Townsend. I am a lawyer that has practiced
international transactions for over 20 years in 33 countries of the world. I am licensed to practice law and in good
standing in the State of
§
POPULAR BOOK. I have written an e-book titled: “LAWYERS’
GUIDE: Advising Clients on High Yield Investment Programs and Ponzi
Schemes”. For
information see Book Info
Why The Need For This Article And The Book On Private
Securities Trading?
§ There are probably more than a million people around the world that are trying to induce investors to invest in either (i) high yield investment programs (sometimes called “HYIP”) or (ii) the buying and selling of bank instruments (called “buy-sell deals”). This group of “entrepreneurs” is composed of either naïve brokers who do not know what they are doing or fraudsters perpetrating a fraud. And the problem is that unlawful HYIP and “buy-sell deals” look very similar to lawful private securities trading transactions (called “PST”). As I represent investors in PST matters, these investors come to me because brokers and fraudsters have confused them to the point that they believe that the unlawful HYIP and “buy sell deals” are the same as legitimate PST transactions. I wish to clear up that confusion.
My Personal
Introduction to Private Securities Trading
§
Many years ago I was introduced to private
securities trading in a dinner conversation with a Swiss banker at the Ikoyi
Club in
§ Minimum
Consultation Fee for United
States Citizens or Residents residing in the
______________________________________________________________________
Popular
Book by Attorney Robert Townsend!
LAWYERS’
GUIDE: Advising Clients
on High Yield Investment Programs
And Ponzi Schemes
Price: 37.50
BUY
NOW
___________________________________________________________________________
CONTACTS:
Law Offices of Robert Townsend
Hampshire House
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Skype Phone Address: boblama
Fax: 1 310.388.5690
E-mail
bob@townsend.net
(24/7)
Main Web Site: For the
background and experience of Robert Townsend see The Law
Offices of Robert Townsend
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