- Extract from Larry Wingo's Journal
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FormatMany brokers are novices and that's OK.
What's not OK is the failure in communications, because deals fail as a result of a broker's inexperience.
I have devised a format for new brokers so they can tell me all the details about the order.
Fill it out once and use it each time there is a correspondence, between us.
It helps in communicating exactly which deal you are talking about and gives me all the facts on one page.
It saves me time and makes you look extremely professional in your field.
The form is not copyright protected.
You can use it anywhere, without fear.
It's my form.
I created it and I authorize you to use it, free of charge.
For the sake of clarity, use this format.
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BROKER KIT
Here are the forms you need, to get started:
- Cover Letter
- NCNDA
- IMFPA Buyer Signs 7 Contracts
- 20 Questions for Buyers
- Blank Soft Offer - JP54
- 60 Questions for Sellers
- Blank Soft Offer - Urea
- Broker Duties Blank Soft Offer - Mazut
- Collecting Information ICPO-10_items
- The Process Blank Soft Offer - Cement
- Official Seal Generator 20 Clues That It's A Scam!
- Help with writing ads here Blank Soft Offer - Bitumen
- Format
- Payment Terms
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NCNDA - Commissions can be large and if you want to try to protect your commission, you will need a signed document from both buyer and seller, pledging that each will not go around you.
It doesn't mean that they won't go around you.
If your commission is high enough to give them an incentive, some will certainly try.
When you have a problem and call the ICC, you learn some new things about the ICC.
First, they don't arbitrate for you, even if you put them into your contract.
We called them and they said they don't arbitrate for non-members.
That might explain why they pass out their NCNDA forms for free.
They even make it easy for the buyer to go around you, with a penalty of one to one.
If they buyer or seller gets caught, he has to pay the commission, without penalty.
That's like a store putting up a sign which reads;
IF YOU GET CAUGHT SHOPLIFTING IN OUR STORE, YOU WILL HAVE TO PAY FOR THE MERCHANDISE THAT YOU STOLE - (No Penalty!)
This would certainly encourage every shopper to attempt to steal, rather than stand in long checkout lines.
In my opinion, that's what the ICC does.
They encourage stealing from us brokers.
Why would they do that?
Would it be to get more chamber of commerce members?
Maybe!
We also learned something else about the ICC.
They want money up front and then they assign someone to your case, within 30 days.
You don't even know if they will take the case yet!
Including dues, that figure came to $88,000 when we had a problem.
Brokers typically don't have $88,000 laying around to hand to the ICC for membership dues and up front fees and so we had to drop our case, but we learned from that lesson and we took the ICC out of our contract and we beefed up the penalty and we deleted all references to arbitration.
Why should we use arbitration when we can go to a private attorney and say, We have a commission of $50,000,000 and our NCNDA calls for triple damages, so it's $150,000,000.
Private attorneys would chase ambulances for part of a fee this large and we have the notarized signature of the buyer and his bank account too.
If the lawyer wants an up front fee, we contact other attorneys, until we find one who just wants 40% of $150,000,000 and thinks we have a good case.
You must use competitive forces to negotiate your best deal with attorneys.
The reason that they charge 40%, instead of 2%, is because few have the tchutzpaho negotiate with attorneys.
If you have two, competing, with both knowing about the other, they will cut each other's throat and a bidding war will ensue, because there is a $150,000,000 case and we have the documents to prove that the buyer and seller signed.
Maybe you can even get one of them to pay you an up front fee.
Hehe!
Then your sign can read; GO AHEAD, STEAL IN MY STORE AND SEE WHAT HAPPENS TO YOUR BUTT!
I'LL HAVE LAWYERS KILLING EACH OTHER TO GET THE CASE!
So, in conclusion, my NCNDA form has no mention of the ICC and no arbitration provision, for the reasons stated above.
If you agree, use my form and if you want to call the ICC and see what they tell you, to confirm or negate what I am reporting, you can do so.
You can call the American Arbitrator's Association too.
They have no membership dues, but they wanted an up front fee of $65,000 to handle our case, should we have a problem.
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IMFPA - If you are going to be paid, we will need your bank information so we can wire funds to your account.
I ask for this at the time of the NCNDA, because brokers, eager to run away with all the commission will put all their relatives on the payroll and some will even invent imaginary people who have to be paid.
When the IMFPA comes in, it has only one name on it.
One guy wants to receive the money for all others.
That's the giveaway that they are not telling the truth.
It happened to me, more than once.
Now, I want to see the separate names and bank accounts of those who are going to be paid, complete with SWIFT codes, so the Paymaster can pay each with a wire transfer to his or her own account.
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Payment Terms - Nothing wastes more time than buyers who can't pay and if you will just use this form to confirm that the buyer will pay according to these terms, we can discover, early, if we have a real buyer or just another broker who wants to 'buy cheap and sell dear'
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Format - Many brokers are novices and that's OK.
What's not OK is the failure in communications, because deals fail as a result of a broker's inexperience.
I have devised a format for new brokers so they can tell me all the details about the order.
Fill it out once and use it each time there is a correspondence, between us.
It helps in communicating exactly which deal you are talking about and gives me all the facts on one page.
It saves me time and makes you look extremely professional in your field.
The form is not copyright protected.
You can use it anywhere, without fear.
It's my form.
I created it and I authorize you to use it, free of charge.
For the sake of clarity, use this format.
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Signature - If you're going to be in the commodities business, you will have to be able to sign your name and send it over the internet, on a document, so you might as well learn how to do it now.
I can help you, if you have a digital camera and can sign your name.
Just take a photo of it and send me the bit map, JPG, GIF or PNG image.
You can scan it too and then you don't need me
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The Process - The baseball analogy helps many understand the complex process, by using similarities of the well known baseball game.
Just sit back and watch the explanation, in its easy-to-remember format of a baseball diamond.
First base is getting the NCNDA and IMFPA signed.
The the FCO or draft contract.
Next, the final contract and finally, the SGS inspection and funds are wired to your bank account.
It sounds simple, but most brokers can't get to first base.
Believe it or not
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Friday, January 15, 2010
Three main faults; Carelessness, Laziness and Greed
Today, I received a soft offer from a seller
We had negotiated a commission of $5/mt for the broker and me and the soft offer still shows $2/mt
My buyer has signed the NCNDA, given me an ICPO with bank information and I think he's a well qualified buyer who can afford to pay and wants to buy
So, what does my supplier do?
Does he give me some specific attention? No! He sends me the generic soft offer and he didn't even open it to see if it has all the details
The product specification is missing
This means that he expects my buyer to spend $42,000,000 per month for a year, more than $500,000,000 (five hundred million dollars) without product specs!
So, I write back and say, You are lazy and you are careless and the generic form isn't going to convince me to buy from you
The commission is wrong and there is no NCNDA from his source or their sources
I advised my counterpart to get organized, make a checklist and put on the checklist the things that we need, if we are to do business
Suppliers who treat you badly, before they get your buyer, will not treat you any better, after they get your buyer's ICPO, with his name, address, phone number, email and bank information
They don't need you, once they have your source and if you want them to respect you, you have to put it on the line, prior to handing over the ICPO
They structured the deal where the $8 of the $10 commission goes to them
This is pure greed and it's not wise, because the world is very competitive
My counterpart and I would have to share what's left, which is about $1/mt each
Almost all American boys have played basketball and therefore they have common experiences
I allude to the lessons learned on the basketball court
The boy who owns the basketball, is not often the best player
Neighborhood kids congregate to play a game
Two leaders begin to select kids from those who have assembled
Leaders choose the best players, first, naturally
At the end, there is one kid left over, typically the player with the least ability and in this case, he owns the ball
If he is not chosen to play on a team, he goes home and takes the basketball with him; GAME OVER!
Leaders don't consider ...... Who owns the ball?...... and What happens if he is not happy and leaves?.... when they chose their teams
They make the fatal mistake of not choosing the ball owner, so that they can, at least, have a ball in order to play the game
So, invariably, you have the same situation every time
The last guy to be chosen for a team does not play
He takes his ball and goes home
That ends the basketball game, before it has started!
Greedy brokers and those who like to be called, 'mandates' seldom consider that it is important to leave a little commission on the table for the guy who has the buyer, because if he takes his proverbial 'basketball and goes home, GAME OVER!
In our D2 deal, I pointed out that I have the buyer and my buyer has the money
I asked how much they make if I give my order to someone else
This is a thought provoking question and some can reason, but most people are not smart enough to figure it out
If I propose a 50/50 split, without giving them some new choices, greed allows them to think about only these two scenarios:
1. $8 to them and $2 to us; their proposal
2. $5 to them and $5 to us; my counter proposal
The psychology is not right and you can't expect anyone to select #2 when #1 is so much better, for them
Boys on the basketball court are not very thoughtful
They are impassioned by the game and they think only of winning
If the worst player were to remind them, as they are choosing players for a team, that the basketball is his and if he goes home, the game is over, before it has begun, they might be more thoughtful and considerate and allow him to play
So, I had to give them these options:
1. They get nothing (because I take my basketball (buyer) and go home and that ends the basketball game (D2 order))
2. They get $2 and we keep $8 (which is the deal they offered us and I want them to see how it feels)
3. We each get $5/mt (which is a fair deal and they should recognize that it's fair and at least they get something)
After I have delivered the stinging notion of giving my order to one of 64 D2 suppliers I have, at present, I proposed that we keep $8 and they get $2 to share among themselves
Once that torturing thought has settled in, I make a third proposal ....................'or we can just take $5 and all of them can share the other $5'
You can see how sophisticated the negotiation process can be
Greed is not very smart and if you are going to break them of the 'greed habit', you have to use psychology and draw from your basketball days or any other experience you have had
They wisely agreed and we had, at that point, a verbal acceptance of $5/mt for the two of us
Then the soft offer arrives and we're back to the $2/mt commission and it appears that they think they are going to cheat us by reneging on their agreement
They won't get my buyer; I'll take my basketball and go home!
This is the lesson of greed, now let's move to the next vice, carelessness
The buyer wants unleaded gasoline as well as D2 and he has given me specs for both
It is my job, as broker, to make sure he has what he requested, or he will take his 'basketball' and go home!
The guy with the money is the boss and he holds all the power in this game
If you forget it, you pay dearly
The soft offer is lacking the product specification, required by my buyer
It has the designation for D2, which is GOST 305-82, but it's lacking the ASTM 2699 for unleaded gasoline
The buyer is American and so he gives us the American spec, ASTM 2699
Perhaps the Russian Federation equivalent is acceptable, GOST 8226
Without any spec, the prices are meaningless
It's like ordering a pizza and you get a price, without the size
How do you know what you are getting?
Buyers don't spend $500 million on D2 without specs and you had better pay attention to the details!
Failing to give this very important issue it's due diligence is pure carelessness and you don't get rewarded for vice
If you are organized and you pay attention to detail, carrying out each duty, then some might say you are professional
If you don't have a checklist, some might say that you are lazy, but I'm not sure if it's laziness or the lack of experience
If you work with me, I'm going to train you and you will quickly become more professional or you won't get my order
I know the job of the broker and I've been a broker for 25 years
You have a job to do
If you know your job, then do it and if you don't know it, I'll tell you, but you must learn quickly or I will get impatient
Nobody likes to repeat a lesson over and over; We don't have time for that
I'll mention it once and if you don't have a pencil in your hand, you will lose it
If you don't review yesterday's lessons, today, you lose both days and next week, you better go over your checklist again to make sure you did it all correctly
When a buyer is spending $500,000,000 on one order, you have to get it right or you don't get paid
This is what you learn over 25 years, if you're smart
Don't be lazy! Get your pencil out and take notes of what you have to do
My broker kit web site is there to help you and it's free, if you are wise enough to use it and learn from the experiences of others
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From: Ob Ajayi
ob@(protected).com
Sent: Mon, December 28, 2009 12:30:56 PM
Subject: Broker Agrmt - OB & LW
Hi there Larry,
Compliments of the season.
I have been to your web site many times than I can now count. As I mentioned to you in our previous phone conversation in times past, this is a huge piece of work; infact, I don't have sufficient words to describe my appreciation of the loaded infor you have on the site. And the outpouring of love and appreciation by many visitors to your site as evident in their statements lend more credence to my words here as well. All I can say is THANK YOU, SIR!
The closest person to my impression of you on commodity trading is Davide Papa of FTN Exporting. The depth of your knowledge and wisdom is unparalled; why? ...because you are also willing to share with others so this industry may be a better place for us all to trade.
Attached herein is my signed Broker Agreement as a sign of my faith in you and willingness to do business with you because I have read through your materials and have come to believe in what you say. Uhm! this is accordance with what my pastor always says, "don't take what I tell you on the face value, go through the Bible to corroborate what I tell you." Although, I have been into many similar and not-so-similar businesses in the past 10-11 years, I have come to realize during my short period in this particular business, that though there are many trading concepts in the commodity biz, sadly and obviously, 98% will NOT lead to success. Yours belong to the other preferred 2%. Thank God I am not stupid, hence, the desire to be on the winning team; according to Davide Papa, 99% of commodity brokers chase deals with no luck/success for many years, I don't want to be part of that statistics, with your approach and his, I believe I stand a better chance to succeed; you really don't have to go through the school of hard knocks to learn in this business, especially from a team of like-minded people such as the ones you have around you, sir.
I wish you well in all your life endeavors, Larry, and please keep up the good work, the world needs more forthright businessmen and brokers like you. And, I ernestly look forward to hearing from you.
Regards,
O B Ajayi
Consto Trades, LLP
Arlington, TX 76017
Ph#: 817-691-1595
My reply:
December 28, 2009
Thank you OB, for the praise
The gift that you have received is not received by all, because it takes two
One writes and one reads it
You are a gifted individual, because you take the time and put forth the effort to read what has been written,
So you will benefit by the lessons learned by others who took the time to write them down so that others can benefit
I did not do it for praise, please understand, I did it for the pleasure of giving, for the benefits of organizing an industry which is very poorly organized and does not work well, most of the time
There is a procedure that should be followed because it is the best procedure we have developed so far
If anyone can make it better, their ideas and contributions are most welcome
As we collect additions from each who feels that his or her own experiences are worthy of putting into the record, we amass a vast pool from which everyone can draw
Imagine that we have a bank account and each person puts in a small amount and all can draw out the entire balance
If that were possible, then everyone would want to be part of that group, which owns the bank account
That's what we have with knowledge, for it costs nothing, but your time to withdraw the full amount from that account
No one has to make a contribution to that account, if they don't want to
Anyone can make a withdrawal, because knowledge is a gift from the creator and it is meant to be shared
When we give this gift to others, the benefits and ramifications just continue, like repercussions
Suppose that one person makes a sale and receives $10,000,000 in commission
How long will he or she enjoy the benefits of that money?
Perhaps a lifetime and perhaps several lifetimes, when you consider the children of the children of the original broker
So, we all should draw a lesson each day, write it down, review it periodically for our own benefit, in case we forget and we should pass it on to others, so that they might benefit
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From: GENR8 TRADING CC - Warren v.d.Westhuizen
Sent: Tuesday, June 23, 2009 11:22:21 AM
Hi Larry,
Thanks for the previous mail , much appreciated. A quick question , is there any possibility whatsoever that we can provide any past B/L and SGS that are sanitized? as this most definitely seems to a very common pre-requisite. Is it possible as it would most certainly strengthen my case with my respective buyers?. Please revert at your earliest convenience. Many thanks.
Kind Regards
WARREN VAN DER WESTHUIZEN
GENR8 TRADING CC
+27 71 133 5329 ( South Africa )
E-mail : (protected)@genr8trading.co.za
(protected)@gmail.com
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Warren,
Only a novice would ask you for such a thing
They think this proves something, but it can easily be faked
Just imagine that someone send one to a deceiver; He would make it his own and use it as proof, to others
They might also want to know the name of my source
How can you provide proof of a past shipment, without showing the seller?
Don't be fooled by this ploy to gain the name of my seller or get a document to fool others
I do not trust those who ask for this kind of document
I think they have bad intentions
No, they can't have and B/L or SGS, sanitized or not, but they can have a visit to the factory or refinery, if they sign the final contract and prove that they have money to pay
Nobody is going to ask anyone for money up front, as the crooks do The professionals in this business have one way of operating and the amateurs and crooks have other ways and you are discovering the difference
We have developed a procedure, to avoid mistakes and if this procedure is not the best, then tell me how we can improve it
Procedure is here:
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January 20, 2010
Fethi is new at brokering commodities
I explained that there are three major skills that a broker needs to survive here
1. Command of the English Language
2. An understanding of International Law
3. An undertanding of Standard Business Protocol
I don't mind broken sentences, as long as I understand what they mean
There are many language translators out there
Google
Langenberg
Type in a simple sentence, convert it to the language, then copy the foreign language and convert it back
If it says what you said, you can use it
If you can't understand what it says, then it probably won't be clear to the recipient
Don't get fancy with your sentences
Long, run on sentences won't translate, clearly
If you don't need a translator, to write in English, then you must write in clear sentences, to be understood
Most brokers fail at communication of basic ideas and following standard business protocol in letter writing, speech and discourse
There are many chat places
Skype
Yahoo Messenger
MSN
Google
If you can communicate clearly, you can send your ideas around the world, crossing many oceans and seas
You can make deals and make money, but if your sentences leave your associates confused, your deal can die
You can lose $6.3 million on one deal, so if you don't write in full sentences and if you can't communicate ideas clearly, then work on that, because it's very important to master #1, above
In #2, above, I have listed, 'An understanding of the law
If you don't know why the NCNDA is important or why it must be signed by the seller, you might pay $6.3 million to find out why the NCNDA deserves careful attention
All brokers are on the same team and all should work to protect the team
No conflict should arise out of the required signature of buyers and sellers, as stated in IncoTerms 2000 rules of international commerce
I try to explain all this on my web site
All you have to do is read it
If you are extremely lazy, you can still listen to it
Just download Firefox and download the Add On, which converts any web page to a PDF, then download the Add On, which converts text to speech and sit back and hear the page being read to you
You can use this on all contracts, to read the fine print
There is another program which is good
It's called ReadPlease 2003 and you can begin with the free version to try it out; I'm still trying it out and I use it every day and I've done so for years
Here, you load the text, with a copy and paste and you sit back and listen at the speed you like most; I'm up to 8, which is about 300 words per minute; I read a book per day now
If a book is 1,000 pages, it's not a problem; This thing devours contracts, like snakes, eating mice! It makes me powerful
People send me a complicated document and they are always surprised, when I send back an articulate assessment of what's written there and you can do the same!
So, Fethi is new at this and he sent me a signed NCNDA from a broker
He had to send it to her, three times, because she repeatedly told him that she did not get it
He sent her my revised form and what she signed was her own form and that form has typical problems
It requires all who sign it to use the ICC for arbitration and it has one to one damages, which I don't think is fair
The lawyers have to be paid and it's risky to sue anyone and it's very costly to fly here and there and stay in hotels, while you argue cases with attorneys
The damages should be triple, to make buyers and sellers think, not twice, but three times about circumventing a broker
Fethi knew that I don't approve of the standard form; We talked about it and he agreed that one to one damages and exclusive rights to arbitrate for us are bad ideas
Fethi had my NCNDA form and he sent it to this lady in South Africa, but she used her own form, instead and then Fethi forwarded it to me, as if I'm the boss and asked me what I think
Here is what I wrote:
I think you already know the answer, if your question is, Will this NCNDA work?
From the document:
ARBITRATION
All disputes arising out of or in connection with the present contract shall be finally settled under the rules of arbitration of the “International Chamber of Commerce (ICC)” by one or more “Arbitrators” appointed in accordance with the said rules.
Have your lady call the ICC to ask if they will arbitrate for non members..........We did this and were surprised by what they told us
The ICC does not arbitrate for non members, so you have to join the ICC first, all brokers must join; Plus, they charge an up front fee for arbitration, if they take your case
Have her ask the ICC what the up front fee is and then you will know why we can't use the ICC appointed arbitrator, as it states above
If she read this document, then she already knows that brokers can do nothing, if circumvented, except call the ICC and ask them to appoint an arbitrator and pay arbitration and membership fees
Yet, she doesn't know the cost of membership, because that is the first requirement; She doesn't know the cost of the arbitrator
When we called the ICC, we were quoted $88,000 which has to be paid, at the time of your request and the ICC told us that they take 30 days to consider the merits of a case
If you pay them $88,000 up front and your case is not strong, they could decide not to take it; What happens to your $88,000? Do they send it back with a Thank You!
Once anyone gets your money, it is unlikely that you will ever see any of it again and that's the way life is, if you ask me
For the above reasons, I have deleted the ICC from my contract, removed the requirement to use them as arbitrators and this removes the up front fee for membership and arbitration
Now I can take my signed contract to a private attorney and get legal help on contingency! That's powerful, because I have the capacity to act, when circumvented; Other brokers don't!
I tripled the damages so that I can afford to pay an attorney 40% of whatever he collects and still be left with 180% of the earned commission and brokers who work with me could still get paid
Being circumvented is routine in this business, because brokers are clueless about what's going on and they argue for the seller and refuse to get the NCNDA signed with a witnesss present
If you want to continue doing things as all other brokers do them, then you can spend 16 years in this business and not get paid for putting buyers and sellers together to make a deal
The revised document I sent you was not used, and therefore, not explained to the lady in South Africa and you must sell her on the concept of 'playing on a team' or she will not sign my form.
If she thinks that she can get my order by creating huge problems, with up front fees and the requirement that we all join the ICC, tell her that I have brokers who want her share of the commission and they might comply with my requests
She loses part of $5 /mt or some $6.3 million on the unleaded gasoline order and there is a D2 order for the same quantity, right behind the unleaded gasoline order; The buyer sent a valid ICPO
She will lose my orders and if she gets a third, each time, ask her if she would trade $2.1 million for this issue, because that's what she is doing; No cooperation, no deal from me
She insists on using the standard NCNDA form, with the requirement of ICC arbitrators and the $88,000 'up front fee', along with a 'one to one' damages clause
This form is unacceptable to me and if you understood why and if you explained it clearly to her, there should not be any dispute over the use of this poorly contrived form
All who understand will agree that we don't want arbitration, because both the ICC and the AAA (American Arbitrators Association) charge up front fees
The AAA does not have membership, so their up front fee is only $65,000
All of this is on my web page and if anyone will study it, they can avoid making mistakes which put all brokers at risk, as a result of using the standard form that is floating around
The obvious problem is that brokers don't read; They don't understand; They don't act to change anything
Some have been in this business for 16 years (Gordon, friend of Jason) and still they don't know anything useful
The most useful information for the new broker is that the NCNDA must succeed in protecting brokers
If there is an up front fee of $88,000 and brokers can't pay their phone bill and they are borrowing money to survive, how can they pay this fee?
They are completely at the mercy of the seller and buyer, because they have money and they know what brokers don't know
Buyers and sellers are swift to exploit their advantages
Every one of them will go around you; Some will do it, on the roll over, when you are supposed to be paid another $6.3 million as a group; Many of them will circumvent brokers immediately after they get the ICPO, without signing a valid NCNDA
Be wise! Be careful! Be paid!
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