Private Placements Are Sometimes Bad Investments

A Private Placement Trading Program (PPP) is a lucrative way of investing and as long as the PPP is genuine, there is no financial risk for investors. As you can imagine, if you are offered a no-risk high profit opportunity in the stock market business you would probably be tempted to jump at the chance. However if you are tempted by PPPs beware, and realize that they are not always what they seem. Many investors have been stung in PPP scams and billions of dollars have been lost. There are law suits underway, but they are notoriously slow to reach a conclusion and given the amount of scams that have been uncovered, relatively few perpetrators have gone to court.

High Returns for Ethical Investments 
Private Placement Programs are those trading with Medium term Bank Notes (MTNs) or Treasury bills (T-Bills). They typically have a high return on the investment and are, more often than not associated with ethical trading. They involve programs which are humanitarian in nature. Investors are required to put part of their earnings into projects which are concerned with humanitarian, social or economic development. Profits from such projects go back into the economy, giving it a much needed boost.

It is Not Legal for Financial Institutions to Invest in PPPs 
Financial Institutions are not legally allowed to participate in such programs so have to find private individuals or companies to invest in them. The investor cannot lose money as the investment is underwritten by the trading group.

This means that the investor is in a win-win situation for once, so it is hardly surprising that some unethical companies have found PPPs useful for conning high level investors out of their capital. The difficulty is that every investor would love to invest in a PPP, but can’t access them as they open and close quickly, so it is very difficult to find a performing trade.

Tell-Tale Signs That All is Not Well 
When national brokerage firms refuse to touch Private Placement Programs, it’s a sure sign that something is “rotten in the state of Denmark” to quote Shakespeare. Even with high commissions available and fees, PPPs are considered dangerous. It’s a case of once bitten twice shy. Businesses have invested unethically in fields that they are not allowed to invest in under the terms of PPPs, including pornographic web sites. So now brokers are very wary of even considering a PPP.

Basically as with every other promise of spectacular wealth or extravagant claims of what product X can do for you, the reality is that the investment or product really is too good to be true. Unfortunately PPPs are to be looked into very carefully. If you do get a genuine one, then you can count yourself extremely lucky.

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