Common index securities

• US 20040254871A1
• Filed: 03/05/2004
• Published: 12/16/2004
• Est. Priority Date: 03/07/2003
• Status: Active Grant

• Current Assignee: Market Shield Capital, LLC
• Original Assignee: Allan N. Weiss
• Inventors: Weiss, Allan N.
• Granted Patent: US 7,155,468 B2
• Time in Patent Office: Days
• US Class Current: 705/36
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A common index fund system and method enables investment in entities that is indexed to a common index, rather than individual company performance. For small business entities, the creation, issuance, trading and management of fund shares as a liquid investment may be accomplished with, for example, a relatively stable industry-based risk. The entities receive value from a pool and in return make payments into the pool in an amount that varies according to the index, which causes a corresponding change in the value of the shares.

Claims

1. A method of providing a common index securities fund, the method comprising the steps of:

A. defining a fund representing a set of entities in at least one class;

defining a set of shares representing claims against the fund;

C. defining an index representative of the at least one class;

D. for each entity in the set of entities,

1) defining a payment stream to be made by the entity to the fund; and

2) adjusting the payment stream in response to a change in the index

wherein the value of the set of shares is a function of the payment stream.

2. The method of claim 1, wherein the set of shares comprises different classes of shares.

3. The method of claim 1, further comprising:

E. offering for trading at least some of the set of shares on an exchange.

4. The method of claim 1, wherein the at least one class represents at least one industry sector or sub-sector.

5. The method of claim 4, wherein the at least one industry sector or sub-sector is geographically, regionally, politically or nationally oriented.

6. The method of claim 1, wherein at least one class represents a plurality of sectors or sub-sectors and the index is a composite index comprising indices having value relationships to the plurality of sectors or sub-sectors.

7. The method of claim 1, wherein defining the payment stream in step D includes basing the payment stream on a percentage of the business'"'"'s revenues.

8. The method of claim 1, wherein the index comprises or is derived from one or more of:

1) an industry index;

2) a composite index;

3) an index representing publicly traded companies;

4) one or more economic indicators;

5) interest rates;

or

6) earnings from one or more businesses in the set of businesses.

9. The method of claim 1, including defining a fund term or termination criteria.

10. The method of claim 1, including defining distribution periods, wherein a dividend payment to fund shareholders is determined in conjunction with the close of each distribution period.

11. The method of claim 1, including disbursing dividends in response to an increase in the value of the fund.

12. The method of claim 1, further comprising:

E. determining an initial payout to each entity by the fund as a function of a predetermined share earning value, a predetermined price to earnings ratio and the payment stream,

wherein said initial payout includes determining an amount of cash or other assets and an amount of shares in the fund to pay each business.

13. The method of claim 1, further including:

E. enabling an entity to buy-in to the fund after fund creation.

14. The method of claim 1, further including:

E. enabling an entity to buy-out of the fund prior to fund termination.

15. The method of claim 1, including offering at least some shares from the set of shares for trading publicly, privately, or some combination thereof.

16. The method of claim 1, wherein at least one entity in the set of entities is a small business.

17. The method of claim 16, wherein the small business is:

1) one or more individuals;

2) a subsidiary or affiliate of a business;

3) a university or not-for-profit organization;

4) a partnership;

5) an entity formerly traded;

or

6) any entity that is not publicly traded.

18. The method of claim 1, including:

E. in response to an entity being removed from the fund, adjusting the payment stream of the entities remaining in the fund to makeup the payments lost from the absence of the removed entity.

19. A method of providing common index security comprising:

A. defining a fund representing a set of businesses from at least one industry sector;

B. defining for the fund a set of shares, an annual share earnings (“

EARNING”

) and price to earnings ratio (“

PE”

), a buy-in ratio (“

BI”

), and a fund term comprised of a plurality of periods;

C. defining a set of buy-in criteria, including defining for each business from the set of businesses;

1) a payment stream (“

PAYMENT”

) from the business to the fund;

2) an initial payout from the fund to the business, the initial payout comprising at least one of a cash amount or a first subset shares from the set of shares, as compensation for the PAYMENT, wherein the first set of shares (“

SHARES TO BUSINESS”

) equals;

(PAYMEMT×

BI)/PE; and

3) a second set of shares from the set of shares to be purchased for the fund manager, wherein the second set of shares equals;

(PAYMENT/EARNING)−

SHARES TO BUSINESS; and

D. adjusting the PAYMENT as a function of at least one index related to the one or more industry sector.

20. A system for providing common index securities, including one or more computing devices configured to communicate via a network, the system, comprising:

A. a fund creation means for defining a fund representing a set of entities from at least one class, the fund creation means comprising means for defining a set of shares representing claims against the fund;

B. a payment means for defining a payment stream from each entity to the fund; and

C. a payment adjustment means for adjusting the payment stream in response to a change in at least one index representing a value of the at least one class.

21. The system of claim 20 further comprising:

D. a distribution means for disbursing dividends to holders of the shares.

22. The system of claim 20 further comprising:

D. a trading means for trading the shares on an exchange.

23. The system of claim 20, wherein the at least one index represents or is derived from one or more of:

1) an industry index;

2) a composite index;

3) an index representing publicly traded companies;

4) one or more economic indicators;

5) interest rates;

or

6) earnings from one or more businesses in the set of businesses.

24. The system of claim 20, wherein the at least one industry sector is a sector of a single industry or a sub-sector of a single industry.

25. The system of claim 20, further comprising:

D. a payout means for deriving from the share earning value and the future payment stream an initial payout to each entity by the fund.

26. The system of claim 20, wherein at least one entity is a small business.

27. The system of claim 26, wherein the small business is:

1) one or more individuals;

2) a subsidiary or affiliate of a business;

3) a university or not-for-profit organization;

4) a partnership;

5) an entity formerly traded;

or

6) any entity that is not publicly traded.

28. A method of providing a common index securities fund, the method comprising the steps of:

A. defining a fund representing a set of entities in at least one class;

B. defining a set of shares representing claims against the fund, including defining a share earning value for the set of shares and an initial price to earnings (PE) ratio;

C. defining an index representative of the at least one class; and

D. for each entity in the set of entities,

1) defining a payment stream to be made by the entity to the fund;

2) deriving from the share earning value and the payment stream an initial payout to the business from the fund;

3) adjusting the payment stream in response to a change in the index; and

4) allocating a number of shares to a fund manager as a function of the payment stream and share earning value and the PE ratio.

29. The method of claim 28, wherein at least one entity is a small business.

30. A common index computer program comprising a set of functional modules for providing common index securities, configured for storage in a computer readable medium and for execution by one or more computer processors, the computer program comprising:

A. a fund creation module for defining a fund representing a set of entities from at least one class, the fund creation means comprising means for defining a set of shares representing claims against the fund;

B. a payment module for defining a payment stream from each entity to the fund; and

C. a payment adjustment module for adjusting the payment stream in response to a change in at least one index representing a value of the at least one class.

31. The computer program of claim 30 further comprising:

D. a distribution module for disbursing dividends to holders of the shares.

32. The computer program of claim 30 further comprising:

D. a trading module for trading the shares on an exchange.

33. The computer program of claim 30, wherein the at least one index represents or is derived from one or more of:

1) an industry index;

2) a composite index;

3) an index representing publicly traded companies;

4) one or more economic indicators;

5) interest rates;

or

6) earnings from one or more businesses in the set of businesses.

34. The computer program of claim 30, wherein the at least one industry sector is a sector of a single industry or a sub-sector of a single industry.

35. The computer program of claim 30, further comprising:

D. a payout module for deriving from the share earning value and the future payment stream an initial payout to each entity by the fund.

36. The computer program of claim 30, wherein at least one entity is a small business.

37. The computer program of claim 36, wherein the small business is:

1) one or more individuals;

2) a subsidiary or affiliate of a business;

3) a university or not-for-profit organization;

4) a partnership;

5) an entity formerly traded;

or

6) any entity that is not publicly traded.