How are CGCAs “Credit Guaranty Funds/Assets” formed ?
The CGCA’s “Credit Guaranty Funds/Assets” are formed from solicitation of investments in the form of “cash or in kind” from accredited investors, against the shares of stocks of the corporation, through the issuance of a Private Placement Memorandum (PPM). In “kind” here means anything of value that is acceptable to the Bank, such as: real estate properties; shares of stocks of corporations, banks, insurance companies and others; bonds, treasury bills, etc. The United States laws that governs the issuance of PPM is the Regulation D exemptions of Section 504, 505 and 506 of the Securites Act of 1933.
