EuropeEuropeASIA Mon - Fri 10:00-18:00 +337-64-0786-17 Mon - Fri 10:00-18:00 +337-64-0786-17


Glossary of Private Placement


BCL (Bank Comfort Letter):  A letter written by a bank officer on behalf of a customer, attesting to the current balance and good standing of an account holder.

BG (Bank Guarantee): A bank instrument, guaranteeing a certain face value for an investor, while collecting an annual interest before expiring upon maturity.

CD (Certificate of Deposit): A 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.

CIS (Client Information Sheet): One of the compliance documents typically required for private placement programs. This document asks for basic information such as the contact details, and line of business the applicant is in.

CMO (Collateralized Mortgage Obligation): A mortgage-backed, investment-grade bond that separates mortgage pools into different maturity classes. By creating a CMO, the bond issuer can collect immediate capital while the purchaser gets the bond at a discount from face value, and collects annual interest.  Though these bonds are frequently found in the private placement business, most of them are worthless since the financial crisis hit.

DTC (Depository Trust & Clearing Corporation):  DTCC provides clearing, settlement and information services for equities, bonds, securities, money market instruments and over-the-counter derivatives. This medium is used in private placement programs to transfer/assign assets to a trader, from an investor.

FPA (Fee Protection Agreement):  An official document outlining all fees due to intermediaries upon the completion of transaction.  This is critical for any private placement broker to understand, and utilize.

ITR (Irrevocable Trust Receipt):  A receipt confirming and detailing the deposit of specific assets into a trust.  Though the ITR contains all details of the asset, banks typically will not assign a value to it since the asset is NOT deposited in a credible bank, but rather a private trust.

JV (Joint Venture):  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.

KYC (Know your Client):  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.

LOI (Letter of Intent):  A 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, especially where solicitation laws apply.

LTV (Loan to Value):  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 %).

MIA (Missing in Action):  A term that describes what happens to most private placement brokers when they fail to live up to their promises. One day, they are blowing up your phones, the next day they are nowhere to be found.

MTN (Medium Term Note): A tradable and discountable debt instrument issued by banks, collecting an annual interest before expiring upon maturity with a specified face value.

NCND (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.

POF (Proof of Funds):  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.

PPM (Private Placement Memorandum):  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.

PPP (Private Placement Program): A private investment program which trades discounted bank instruments (MTN/BG) for profit in the secondary market.

RWA (Ready, Willing, and Able):  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 (Stand 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”.

SKR (Safe Keeping Receipt):  A document created by a bank, on behalf of its customer, which specifies all details of an asset, and confirms its current existence on deposit.

T-BILL (Treasury Bill):  A short-term debt obligation in the form of a interest accruing note, backed by the U.S. government with a maturity of less than one year.

T-NOTE (Treasury Note):  A marketable U.S. government debt security containing a fixed annual interest, and a maturity between one and 10 years.

T-STRIP (Treasury Strip):  This is a “zero coupon” bond issued by the U.S government whose yield is based upon the difference between the discounted price it is purchased at, and its face value at maturity (ex. 10M Note, buy at 85% of face, worth 100% at maturity).

VOD (Verification of Deposit):  This is a signed document provided by a financial institution, verifying the current balance and history of an account holder.  This is similar to a BCL, but the verbiage may be different.