Synthetic Funds Having Structured Notes

• US 20120005065A1
• Filed: 08/18/2011
• Published: 01/05/2012
• Est. Priority Date: 08/02/2002
• Status: Active Grant

• Current Assignee: Peter C. Freund
• Original Assignee: Peter C. Freund
• Inventors: Freund, Peter C.
• Granted Patent: US 8,285,625 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 20/00 Payment architectures, schemes or protocols apparatus for performing or posting payment transactions G07F7/08, G07F19/00; electronic cash registers G07G1/12
• CPC Class Codes: G06Q 20/06 Private payment circuits, e.g. involving electronic currency used among participants of a common payment scheme
• CPC Class Codes: G06Q 20/363 with the personal data of a user
• 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
• CPC Class Codes: G06Q 40/12 Accounting
• CPC Class Codes: G07F 7/0866 by active credit-cards adapted therefor G07F7/1008 takes precedence
• CPC Class Codes: Y10S 707/99933 Query processing, i.e. searching
• CPC Class Codes: Y10S 707/99953 Recoverability

Abstract

The present invention relates to synthetic funds for purchase by investors. A structured note is structured to provide customized equity returns/exposure. Terms of each structured note may be specified by the purchaser and the structured notes may be unsecured liabilities of the obligor, e.g., there are no underlying assets upon which the structure note is based. Thus, there will be no limits on the use of structured note proceeds and management of assets and liabilities will be left entirely to the obligor'"'"'s discretion. Structured note payment obligations may be related to the performance of an objective valuation, but structured note holders will depend on the good credit of the obligor for payment.

Claims

1-80. -80. (canceled)

81. A computer-implemented method for forming a structured note, the structured note comprising a contract allowing an obligor to provide a return to an investor, the return based on at least one selectable objective valuation measure, the method comprising:

identifying an investment goal through requestor interaction with a graphical user interface;

implementing an optimization tool executed by computer processing components for generating a proposal for meeting the investment goal selected by the requestor, the proposal identifying multiple objective valuation measures;

customizing the structured note, using customization components executed by the computer processing components, by combining selected identified objective valuation measures as selected by the requestor to meet the investment objective;

issuing the structured note having the multiple objective valuation measures and meeting the investment objective, wherein the underlying assets of the obligor are not identical to liabilities created by the objective valuation measures of the issued structured note.

82. The system according to claim 81, wherein the at least one selectable objective valuation measure references at least one of:

an actively managed fund;

a mutual fund;

a hedge fund;

a private equity fund;

a venture capital fund;

a passively managed fund;

an index fund;

a market index;

a stock market index;

a generic market level; and

a market instrument.

83. The method according to claim 81, wherein customizing comprises providing customization capabilities allowing customization of the objective valuation measures without a predetermined amount of fees associated with the customization of the objective valuation measure.

84. The method according to claim 81, wherein the structured note is defined by terms including a purchase amount and a time period for redeeming the structured note.

85. The method according to claim 81, further comprising basing obligor payment of an obligor structured note obligation on the selected objective valuation measures at the time of the payment.

86. The method according to claim 81, further comprising providing an interface allowing requestors to test the structured note to review performance over multiple historical time periods.

87. The method of claim 81, further comprising allowing the requester, through a graphical user interface, to model a change in a risk profile of the structured note resulting from increasing or decreasing exposure to the objective valuation measures.

88. The method of claim 81, further permitting requestors to:

change a risk profile of at least one objective valuation measure;

add objective valuation measures; and

customize liquidity access for at least one objective valuation measure.

89. The method of claim 81, further comprising providing a post-issuance addition and subtraction option enabling the requestor to add and subtract valuation measures after issuance of the structured note.

90. The method of claim 81, further comprising allowing requestors to implement the customization components to change weightings of the multiple objective valuation measures post issuance.

91. The method of claim 81, further comprising creating a liability and asset mismatch between structured note liabilities defined by the portfolio and offsetting hedge instruments, thus incurring increased risk, thereby enabling the investment return produced to exceed potential return achievable through direct exposure to the selected objective valuation measures.

92. A computer-implemented system for forming a structured note, the structured note comprising a contract allowing an obligor to provide a return to an investor, the return based on at least one selectable objective valuation measure, the system comprising:

a computer memory for storing data pertaining to the at least one selectable objective valuation measure; and

computer processing components for executing software modules for performing steps including;

identifying an investment goal through requestor interaction with a graphical user interface;

implementing an optimization tool for generating a proposal for meeting the investment goal selected by the requestor, the proposal identifying structured note terms including multiple objective valuation measures;

customizing the structured note by combining the identified objective valuation measures as specified by the requestor to meet the investment objective; and

issuing the structured note having the multiple objective valuation measures and meeting the investment objective, wherein the underlying assets of the obligor are not identical to liabilities created by the objective valuation measures of the issued structured note.

93. The system of claim 92, further comprising a request module receiving a request from the requestor to purchase the structured note from the obligor, the structured note having an investment return based on terms of the structured note including the multiple objective valuation measures.

94. The system of claim 92, further comprising graphical user interfaces providing the requestor with customization options that customize exposure of the structured note, the customization options comprising,

(a) an initial selection capability that receives an initial selection of the exposure to the multiple objective valuation measure from the requestor, the objective valuation measures selected from multiple objective valuation measures including both passive and active measures, and

(b) a post-issuance capability that receives an alteration of the initial selection of the exposure from the requestor.

95. The system according to claim 92, where the selected objective valuation measures reference at least one of:

an actively managed fund;

a mutual fund;

a hedge fund;

a private equity fund;

a venture capital fund;

a passively managed fund;

an index fund;

a market index;

a stock market index;

a generic market level; and

a market instrument.

96. The system according to claim 92, wherein customization components provide customization capabilities allowing customization of the selected objective valuation measures without a predetermined amount of fees associated with the customization of the objective valuation measures.

97. The system according to claim 92, where terms of the structured note further comprise a valuation of the structured note;

and

where the valuation of the structured note is based in part on the time period for redeeming the structured note.

98. The system according to claim 92, where obligor payment of an obligor structured note obligation is based on the selected objective valuation measures at the time of the payment.

99. The system according to claim 92, wherein terms of the structured note further comprise a purchase amount and a time period for redeeming the structured note.

100. The system according to claim 92, further comprising an interface allowing requestors to test the structured note to review performance over multiple historical time periods.

101. The system of claim 92, further comprising allowing the requester, through a graphical user interface allowing the requestor to model a change in a risk profile of the structured note resulting from increasing or decreasing exposure to the objective valuation measures.

102. The system of claim 92, wherein the customization components further permit requestors to:

change a risk profile of at least one objective valuation measure;

add objective valuation measures; and

customize liquidity access for at least one objective valuation measure.

103. The system of claim 92, wherein the customization components allow requestors to change weightings of the multiple objective valuation measures post issuance.