My bank was approached to open accounts for Private Equity Investors. I was wondering if any other banks open these type accounts and what your bank procedures are. I a not familiar with these type of businesses. I was told these type of investors put together Private Placement Memorandums in accordance with SEC regulations. The PPM lists the type of investment the company is raising money for (could be to fund the building of a hospital ), the amount of capital needed to build the hospital, the minimum amount needed to begin project, what happens if the minimum amount is not raised, etc. Any assistance would be greatly appreciated. Thanks~

Welcome! That's some first post!

I don't purport to know anything about this type of customer and a Google search on "private equity investors" didn't tell me much. The search results for "private placement memorandum" were a little more helpful; i.e. I know such a thing exists, but I'm a bit fuzzy on whether it is regulated by the SEC as I can print the forms online.

It certainly sounds like a sophisticated endeavor. That makes me wonder why they would choose a bank with no familiarity. Maybe someone else can give you chapter and verse on what to do, but I doubt it. Start your research with figuring out why they picked your bank and whether it was a logical business choice for them to make...

We do these types of accounts. They are generally pretty simple, but you need a sound, detailed contract. Once you have that, you act in accordance with it. If you want to get into the line of business, have an attorney assist you with the documents (which really drive the procedures).

At my institution, in general, the bank receives money and waits for pre-established agreements and minimum offerings to come in (or the offering date) before doing anything. In our experience, the Private Placement Agent does the leg work in making sure investors fill out necessary forms. If the offering is met, the money is releases to the investee once proper documents are submitted. If it is not met by a certain date, the bank must return the money to the investors individually.

In your research, try also searching "Escrow Accounts"... Accounts where investors/investees act in accordance with a Private Placement Memorandum are a type of escrow account.

Sounds like you probably need trust powers to act in that capacity.

The owner of this business has had other previous relationships with the bank. So I know why he wants to use our bank.

Dog Lady (sorry didn't mean to call you a name!)-Do you request the name of the investors involved and the dollar amounts of their offerings? I have some more questions, is there a way that I can contact you?

Click on her name. Click Send a PM (private message).