Since  my very beginning in my current position I have been free to assist and give information as much as possible to enhance the flow of business for my fellow contacts. Even if most of them had nothing in return, I learned over time that such may change and indded over the years it has generated lots of longterm contacts which I really enjoy.

However it is also the case that some never listen to advise or just feel they are more experienced and do not even take steps to avoid mistakes or pitfalls.

Such is currently a long list of people contacting me with trouble getting paid in broker transactions. Some are simply bnot paid because they worked on the basis of a dream and not reality but some simply lost their broker commission because they did not set up proper receiving structures, had no licence (yeah, some principals play it hard and the arguments comes in handy after some litigations in NYC), had untrustworthy partners or all the above.

SO here in short:

a. have clear agreements

b. have institutional accounts for receiving money from institutional transactions

c. make your position on licenses clear in your jurisdiction

There are lots of details to think about, so I keep this short. I do not mind people asking, and there is no need to do business my way, just don't wail when you take no precautions.

Richard, I think every genuine player on this board will simply agree with you on this subject.

I do not think the problem lies with the principals on this matter, it is purely a greed matter within the intermediaries. Some intermediaries have a bigger ego than others and as such demand a larger slice of the cake once the get their hands on the deal. If the deal is successful the principal in some cases do not even have the names of some of the participants and simply rely on the honesty of the ''paymaster'' to take care of these unknowns.

Richard, I think this all comes down to a simple explanation, if you are the broker with the client, make sure that the principal on the other side has fully acknowledged your position and without this contract in place do not release your position.

I also believe there is a secondary issue, and a more serious issue unknown to brokers

I will give you an example.

We have successfully completed a transaction that is well covered on this board, we have two intermediaries to be paid. One was paid the other did not supply sufficient data to the bank and was subsequently disbarred from payment.Not of our doing but by the bank.

Why you ask?

The bank requested from the following from the broker,

name, address to be verified by a commodity bill, a landline number and proof that this was also located to his home address, copy of passport. He failed to provide sufficient data for his home address to be verified and as such was declined for participation.

This is now a growing trend with major European banks.

Diligence is more intense on brokers now due to tax reporting requirements which have been placed on the banks by Government authorities, money laundering and terrorism dilgence, and finally a criminal check.

I have know many brokers who have failed this hurdle because of fraud charges or pending fraud investigations. Brokers are simply not fully aware of the checks now carried out on them by banks and in my opinion should take the trouble to find out the diligence compiled on them. Most banks have a list available of brokers who have been involved in criminal activity, those who the bank know to have been the fringe of criminal transaction without their knowledge because they are being used by the fraudsters,thus they are still considered a participant in fraud even if unwillingly. This the banks put down to a failure to complete diligence on any transaction offered to the broker.

By the way these lists are not available to public forums and despite the efforts of these type of forums most of the lists offered are due to personal experience and normally a result of a falling out between people.


An another reason which covers non payment to brokers.

We have been offered many MTNs for sale over the past few months.
pricewise they seemed ok on the offer 95 +1 you give this to your bank to check out and find that the real market value is usally around the 88 percent, the rest is made up of unknown brokers who have all added this 1 percent commission. What happens then is that both banks are now in contact see the someone is overpricing the instruments without authority and they do a deal direct. Everyone loses out except the brokers.

Merrill Lynch and similar types of Securities House work on basis points and are happen to earn 20 basis pounds to close a deal, brokers are looking for a minimum of 100 basis point each. There is never this much in any deal so hence another reason why brokers are not earning and probably never will.

To make money in this business I agree with Richard, in that a clear contract of involvement must be in your possession, even if it means having lawyer involvement for repercussion sake, a completed diligence on the other party to make sure then can be trusted. Always ask for a verifiable address, i.e. a utility bill showing his name and address. Think about it, people will quickly give you a passport copy, so why not a simple thing like a utility bill instead. Least you know where to go if they fail or cheat you. Finally make sure your client has the money and is the signature to the money, because this is where it all breaks down at the participating banks.

If you cannot follow these simple aids then we are left with the same revolving circle and questions as to why were we not paid or cut out of the deal. I hope this adds to Richard's points and helps genuine brokers out there, that money can be made but there is no magic way to a fortune, the banks ensure without money you will not make more than they do.

Hi All


http://www.eclipseaviation.com/

http://www.teslamotors.com/

http://www.millenniumsuperyachts.com/

Get an honest deal done, then own these without IRS breathing down your neck.

ps: don't book till you have gotten your monies cleared & Section 9 is a tightrope walk.

you are a bit confusing the bank positions.

If a broker gives out a bank account to get paid the dd is the receiving banks job, the sending banks DD job is on the instructing party and its origin of funds etc.

The lists you talk about are a myth, there is a database each bank does keep updated and it pulls up the details of suggested involvement of that bank, legally only a convicted, in some jurisdictions even indicted" individual can be kept on his data for all available, beside the pitfalls of relying on the credit file details (I've seen to many fakes) and beside the problem of multiple id allocations (I have 14 guys working as brokers which share my name, some have been in jail, some have been indicted, one is a general consul in Europe etc) the banks are having a hard time. So the policy is concentration on the client profile, not the receiving non-client profile.

That is only different if there is a trust relation and/or a government transaction.

We do screen through our internal database and we share the access for that database with different banks in a sort of club arrangement but the data is internal. Tax wise the legal need for notification to the tax authorities is done from the receiving bank , which has the account and tax details, or from the sending bank as well with the data of the wire on the tax id of the sending entity. In case of the believe of money laundering the bank can issue an SR, or contact the authorities direct (see the Spitzer file) and sometimes they delay to accommodate the authorities, but everything is linked to the client data.

Business wise a broker needs a contract and for receiving money an account, the rest depends on the transaction and careful assessment of the possibilities.

In the business you describe frankly I said it often I will not pay or even use brokers, no need for that from my perspective. The broker's problem is the principal by the way, if there is a way around it any principal will cut out a broker who just raises the price by talking per cents and not small basis points.

My argument for the broker is to stay on earth, clear contracts and common sense (or at least the ghost of it).