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Business model

Here the business model, edited by Attorney-at-Law, Esquire S.M. from Munich, is presented in its original form.

Contractual and legal aspects in the participation in the best investment in the money market. One of the top Swiss banks manages the business. A large Trust Firm oversees all procedures


I. Introduction

 

 

 

Here the business model is described, that allows investors to participate in the best investment, otherwise exclusively privileged to institutional and investors with “deep pockets”. Under this business model, investors must bring-in own investment funds of one hundred thousand Euro (€ 100.000) or more to participate. Participations in the best investment take place in the money market. Thereby investors criteria are:

 

(1) the best return on investment while preserving 

(2) the highest security, and

(3) the highest liquidity with

(4) a swift availability of funds.

 

In addition to these criteria, investors sponsor with their participation in the best investment - without contributing financially - the promotion of a supraregional medical centre, including a vitally needed humanitarian project. The latter consists of a medical hospital, specialising in orthopaedic surgery, as well as general medical services, both stationary and ambulatory. 
 
Best investment participations are of the set-off made to these specific requirements 
– Highest security, highest liquidity, best return on investment and swift availability of funds – As they take place in the interbank money market.
 
Through his personal experience, the principal hereto has contacts to financial intermediaries, accredited by big Swiss banks. He is prepared, in cooperation with a large Trust Firm, to put these contacts at the disposition of prospective investors, desirous of participating in this, otherwise privileged, best investment upon their demand.
 
The large Trust Firm, appointed by me to accompany the participation in the best investment, ascertains the management of the investment funds in strict conformity with:

 

(1) the underlying Trust Agreement and

(2) the instruction letters of the participating investors.

 

In monthly periodical intervals, investors are permitted to inspect all account and auditing statements with an international auditing firm.



II. The business model
 
 
 
(1) Choice of Law
 
In principle, the business model, described herein is not bound to the jurisdiction of a particular country. There is no legal or tax-wise advantage in using the one versus the other domain. Herein the applicable law results from the location of the banks involved, which is Switzerland, and the business provided by the financial intermediary. As the latter is active in Switzerland, the application of Swiss Law lies at hand.
 
 
 
(2) The business parties
 
The business model consolidates on the co-operation of the three participating parties, inter-related by contractual agreements. None of the parties isolates from the others nor excludes itself to any information. The essential element in this structure is transparency.  The three parties are:
 
(a) the principal hereof – through a single purpose company in the representation of all the participating investors – and the trust firm, both overseeing and documenting all transaction activities on behalf and for the account of the investors,
 
(b) the Financial Intermediary, accredited by contract by a big Swiss bank, and
 
(c) the big Swiss bank.
 
 
 
(3) The contractual agreements
 
The following diagram illustrates the contractual relationships among the three parties:
 
 

The contractual agreements by and between all three parties create a reciprocal relationship. To understand one single of these contractual relationships, one must know the content of the other contractual agreements. This economic concept of accords reduces the content of all contracts to an absolute minimum and negates repetitions.
 
 
(a) Contractual  agreement  by  and  between the  principal  and  the  Financial Intermediary:
 
Before any move with this business, the corporate counsel of the principal and Esquire S.M. of Munich, Attorney-at-Law, ran an in-depth investigation on:


(1) The  Financial Intermediaries, the position and relationship thereof with the big Swiss banks,
(2) The investment business itself,
(3) The inter-relationships,
(4) The contractual agreements and adhering documents among the three parties,
(5) The positions of and the departments, which the Directors of the banks oversee that are in charge of the businesses, the clients (investors) and the accounts of the clients of the Financial Intermediaries.


The corporate counsel and Esquire S.M. from Munich investigated and worked hereon more than six weeks. This work comprised, however, was not limited to:


(1) Bank internal check-ups,
(2) Inquiries with international supervising authorities and agencies with regards as to possible wrongdoings and or incidents of the Financial Intermediaries, as well as
(3) To financial services licensing in the relevant country or as to whether no licensing requirements would be applicable, based on the “passive financial services rendering on request of an Investor”, as per the regulations of the German Federal Supervisory Board for Financial Services Rendering (BAFin).
Of this in-depth investigation by the corporate counsel and Esquire S.M. of Munich, Attorney-at-Law, it resulted, that nothing whatsoever hinders or objects the ratification of the contracts by and between the principal and the Financial Intermediaries.

 

However, this is subject to either:

 

(1) existing ratified agreements by and between or

(2) the disposition of big Swiss banks to sign agreements with the Financial Intermediaries readily.

 

With the ratification of a contract by and between the principal and one of the Financial Intermediaries, the principal also issues a Power-of-Attorney. The latter is for the management of financial assets in favour of the Financial Intermediaries. That is a standard document of big banks, enabling the Financial Intermediaries to engage the banks on behalf of the principal to complete the underlying businesses or investment objectives.
 
 
(b) “Agreement on  parameters of  co-operation” by and  between the  banks  and the Financial Intermediaries:
 
Before any Swiss bank engages in any co-operation together with an independent Financial Intermediary, the latter is subject to a thorough investigation process. The requirements of Swiss Law and Regulations initiate this process. Any Financial Intermediary must comply herewith to obtain the necessary permits and or licenses. In particular, these are:
 
The Federal Law on Stock Exchanges and Securities Trading (BEHG),
as well as
The Regulations on Stock Exchanges and Securities Trading (BEHV)
 
Art. 10 to 19 of the above Law (BEHG), as well as Art. 17 to 28 of the above Regulations (BEHV) provide a whole series of requirements. Compliance herewith must be fulfilled to obtain the permit as a securities trader.  These are simple requirements by and for a co-operation with Swiss banks. For their reputation, the banks are not merely interested in seeking co-operations exclusively together with reliable and adequately licensed Financial Intermediaries. Moreover, under Art. 9 of the Bank Regulations the banks must care for an efficient Risk Management, which also includes the Limitation of Risks. The banks will not expose themselves to the risks and perils of a co-operation with non-licensed Financial Intermediaries and lousy record/reputation. As in doing so, the banks present themselves to possible investigations by the Supervisory Authority - i.e. the Federal Banking Commission (EBK) - and assume the risk of losing their licenses.
The banks require the following series of documents from Financial Intermediaries, which the latter must provide before any talks on a possible co-operation will be engaged into:
 
- Permits/Licenses by the Authorities,
- Certificate of Registrar (max. 1-year-old),
- List of holders of proxy,
- The individual consultants and Managing Directors must provide copies of their passports,
- CV’s of the latter,
- Business & marketing plans,
- Audit reports & prospectuses.
 
Subject to:


(1) The provision of all of the above documentation to the full content of and
(2) The result of the subsequent negotiations being of certitude that a co-operation will be fruitful,
(3) The banks will ratify together with such Financial Intermediaries “Agreements on parameters of co-operation”, mentioned in the diagram above. The latter describes among guidelines on proceedings, also rules for the protection of clients. Attention is drawn primarily to Articles 3 and 11. These oblige the Financial Intermediaries to great, informative duties towards their client(s) (here the principal, representing all the Investors participating, AND the Trust Firm). In the event, the Financial Intermediaries do not adequately fulfil these informative duties; the banks reserve themselves the right of doing so.
 
Under point 9 of this “Agreement” explicit reference is made to the official licensing of such Intermediary. However, this is of declarative character only. The requirements of law supersede.  Note, the banks will care utmost to fulfil the Swiss Law. Moreover,  Financial Intermediaries are obliged to keep with the norms of all jurisdictions under which their activities come. As such and as described under Article 9 of the “Agreement”, the regulations of, i.e. the German Federal Supervisory Authority for Financial Services Rendering (BAFin) apply to Financial Intermediaries, advising and rendering services to clients in Germany. Albeit, their business activities are carried-out in Switzerland.
 
(c) Agreement by and between the principal and the Banks:
 
The arrangements by and between the principal and the banks do not comprise a single contract. These are a series of account management instructions, tailored to fit the needs and requirements of the individual clients. As an example to the proposed investment; the principal will give directions to the banks concerning the quality of paper to be permitted for trading, for the banks to issue and do the purchase, investment and or placement order(s) of the Financial Intermediary at all! The underlying paper, permitted for trading, must, as evidenced in the Deed of Trust, ratified by and between principal and the Financial Intermediary, be of a minimum credit rating of A+, as per Standard & Poors, which ascertains the value during the relatively short period of trading. Complementary to it the principal issues an Instruction Letter direction to the respective big Swiss bank, which restrains the Power of Attorney, issued in favour of the Financial Intermediary, to the extent and type & quality of paper, as described therein. The Instruction Letter of the principal is on the grounds of the Instruction Letters of all investors, participating in the best investment deal. Every participating investor issues such an Instruction Letter as part of the Trust Agreement, ratified by and between the principal and all participating investors. Moreover, the Instruction Letter obliges the big Swiss banks to:


(1) The supervising of the correct use of the funds,
(2) The full Information on Risk, and
(3) The safeguarding of client’s interests, notably
      (a) The value preservation,
      (b) Not to incur any losses, and
      (c) To generate investment income!
 
This Instruction Letter does, among others, not object to the “Agreement” by and between the Financial Intermediary and the respective bank. In specific therein under point 2, paragraph 3! The big Swiss bank does not supervise the transactions of the Financial Intermediary! However, the bank is instructed by the principal to permit and do only specific transactions! The content of the Instruction Letter with respect as to the management of his account (two signatories, i.e. the principal and the Trust Firm) and deposit is at the sole discretion of the principal and has “per se” nothing to do with the Agreement by and between himself and the Financial Intermediary.
 
Only point 1 of the Power of Attorney, issued by the principal in favour of the Financial Intermediary, is restrained by the Instruction Letter. Also to that, the Instruction Letter conforms with Art. 3 of the Deed of Trust by and between the principal and the Financial Intermediary and assures it’s performance in care!
 
The Instruction Letter is legitim, as evidenced in Art. 13 “Special Conditions in favour of End-Clients” in the “Agreement” by and between, here, in this case, UBS and the Financial Intermediary. It's worth to mention that the proposal to such Instruction Letter comes from the big Swiss banks directly. And, as such, the Financial Intermediaries complies with the content of the Instruction Letter!
 
 
 
III. Conclusive
 
 
 
The present dissertation is a basic outline of the investment opportunity of the principal. It does in no way implement to be of absolute character but serves as a quick overview of the parameters. It should serve as a basis for discussion and bring forth queries by the interested parties (investors).
 
No in-depth consideration has been given herein to the paper (bank obligations), traded in the best investment in the money market, which, however, under the present structure does exclude a loss of the investment funds. A personal meeting and discussion by and between the principal and the individual clients, interested in participating in the best investment, will clear the matter thoroughly.
 
 
 
Munich, May 2015