US008099344B2

(12) United States Patent

(10) Patent N0.: (45) Date of Patent:

Wallman (54)

(75)

(56)

METHOD AND APPARATUS FOR ENABLING INDIVIDUAL OR SMALLER INVESTORS OR OTHERS TO CREATE AND MANAGE A PORTFOLIO OF SECURITIES OR OTHER ASSETS OR LIABILITIES ON A COST EFFECTIVE BASIS

Inventor:

*Jan. 17, 2012

References Cited U.S. PATENT DOCUMENTS 4,346,442 4,376,978 4,412,287 4,566,066

A A A A

8/1982 3/1983 10/1983 1/1986

Musmanno Musmanno Braddock, III Towers

(Continued)

Steven M. H. Wallman, Great Falls, VA

(Us)

FOREIGN PATENT DOCUMENTS JP

(73) Assignee: FOLIOfn, Inc., Vienna, VA (US) Notice:

US 8,099,344 B2

6-295300

10/1994

(Continued)

Subject to any disclaimer, the term of this patent is extended or adjusted under 35

OTHER PUBLICATIONS

MarkoWitZ, Harry M., Ef?cient Portfolios, Sparse Matrices, and Enti ties: A Retrospective. Operations Research (0030-364X), 2002. vol. 50,Iss.1;p. 154, Source: Business Source Complete, available online

U.S.C. 154(b) by 987 days. This patent is subject to a terminal dis claimer.

@

http://Web.ebscohost.corn/ehost/pdfvieWer/pdfvieWer?vid:2

&hid:10&sid:4d0160da-f668-411a-95a1

1d5de2cc7b67%40sessionmgr10, last accessed May 9, 2010*

(21) Appl. No.: 10/627,626 (22)

Filed:

(Continued)

Jul. 28, 2003

Primary Examiner * Mary Cheung

(65)

Assistant Examiner * Daniel L Greene

Prior Publication Data

US 2004/0024677 A1

(74) Attorney, Agent, or Firm * Kenyon & Kenyon LLP

Feb. 5, 2004

(57)

ABSTRACT

An investor adjusts a risk-return characteristic of a portfolio of investments by using a graphical user interface to adjust a

Related US. Application Data

(60) Division of application No. 09/139,020, ?led on Aug.

pointer on a screen up or down. In response, the computer

24, 1998, noW Pat. No. 6,601,044, Which is a

system automatically recalculates the required mix of the

continuation-in-part of application No. 09/038,158,

portfolio’s stocks. Trades are then sent to the system for

?led on Mar. 11, 1998, noW Pat. No. 6,996,539.

execution to implement the adjusted portfolio. Thus, inves tors are afforded a simple click-of-a-mouse mechanism to

(51)

G06Q 40/00

(52) (58)

adjust their entire portfolio to precisely the types of portfolio

Int. Cl.

characteristics desired Without having to knoW about the vari

(2006.01)

ous interactions of securities With each other or the portfolio effects of changing one security or another or have any other

US. Cl. ......................... .. 705/35; 705/36 R; 705/37 Field of Classi?cation Search .................. .. 705/35,

knowledge.

705/36 R, 37

See application ?le for complete search history.

20 Claims, 17 Drawing Sheets

start

selecting a portfolio of investments from a plurality of potential

investments options

l adjusting a desired risk-return characteristic of said selected portfolio by adjusting a risk- return pointer using a graphical user Interface device

l determining automatically by a processor a weighting of a plurality of

instruments in the portfolio to accommodate said adjusted risk-retum 1 characteristic

transmitting one or more trades to implement an adlusted the portfolio over a c amputer network

end

is:

7.1a

US 8,099,344 B2 Page 2 US. PATENT DOCUMENTS

4,597,046 4,642,768 4,648,038 4,674,044 4,750,121 4,751,640 4,774,663 4,910,676 4,933,842 4,953,085 4,980,826 4,989,141 4,994,964 5,038,284 5,101,353 5,126,936 5,132,899 5,148,365 5,155,847 5,193,056 5,202,827 5,210,687 5,214,579 5,220,500 5,227,967 5,262,942 5,269,521 5,270,922 5,297,032 5,375,055 5,497,317 5,517,406 5,649,116 5,664,115 5,671,363 5,689,650 5,689,652 5,704,045 5,710,889 5,724,524 5,729,700 5,745,706 5,749,077 5,758,097 5,761,441 5,761,442 5,765,141 5,774,881 5,784,696 5,794,219 5,799,287 5,806,047 5,806,049 5,812,987 5,819,237 5,845,266 5,873,071 5,918,217 5,918,218 5,924,082 5,930,762 5,930,774 5,946,666 5,960,411 5,978,778 5,999,918 6,012,042 6,014,643 6,018,722 6,021,397 6,035,287 6,044,352 6,078,904 6,098,052 6,393,409 6,473,084 6,601,044 6,799,167

6/1986 2/1987 3/1987 6/1987 6/1988 6/1988 9/1988 3/1990 6/1990 8/1990 12/1990 1/1991 2/1991 8/1991 3/1992 6/1992 7/1992 9/1992 10/1992 3/1993 4/1993 5/1993 5/1993 6/1993 7/1993 11/1993 12/1993 12/1993 3/1994 12/1994 3/1996 5/1996 7/1997 9/1997 9/1997 11/1997 11/1997 12/1997 1/1998 3/1998 3/1998 4/1998 5/1998 5/1998 6/1998 6/1998 6/1998 6/1998 7/1998 8/1998 8/1998 9/1998 9/1998 9/1998 10/1998 12/1998 2/1999 6/1999 6/1999 7/1999 7/1999 7/1999 8/1999 9/1999 11/1999 12/1999 1/2000 1/2000 1/2000 2/2000 3/2000 3/2000 6/2000 8/2000 5/2002 10/2002 7/2003 9/2004

6,996,539 7,110,971 7,117,176 6,952,808 7,454,378

Musmanno et al.

Roberts Roberts et al. Kalmus et al.

B1* 2/2006 Wallman .................... .. .. B2* 9/2006 Wallman .. B2* 10/2006 Wallman ................... .. 10/2008 Jamieson et al. B1 B1 11/2008 White, Jr.

2010/0280971 A1

Halley et al. Lucas et al. Musmanno et al.

FOREIGN PATENT DOCUMENTS

Alldredge Wagner

10/1998 10/1998 6/1999

OTHER PUBLICATIONS

Lyons et al. Wolfberg et al.

Strategic Decisions Conference.Black BookiStrategic Decisions Conference (2003), available online @ http://web.ebscohost.com/

Kramer

Lupien et al. Champion et al.

ehost/detail?vid:1&hid:10&sid:39bc0d7d-45ec-44f2-a155

Fox Dembo Kirouac et al. Boes Sober

3e2891d745d1%40sessionmgr13 &bdata:JnNpdGU9ZWhvc3QtbGI2ZQ%3d%3d#db:bth &AN:16870570, last accessed May 9, 2010.*

“Self-Regulatory Organizations; Filing of Proposed Rule Change by

Wolfberg et al. Wolfberg et al.

New York Stock Exchange, Inc. Relating to Amendment to Rule

411(b) Regarding the Entry of Odd-Lot Orders”, Federal Register, Mar. 17, 1992, p. 9299, vol. 57, Issue 52, Washington, DC, US. Jon Newberry, “Bye bye broker”, ABA Journal, Mar. 1998, p. 90, vol. 84, Chicago, US.

Baird et al.

Bailey Earle Rossides

Higgins

“Direct-Buy Stocks Cut Out Middle Man”, Palm Beach Post, Mar. 9, 1998, p. 17, Palm Beach, US. “Frankfurt to Launch Trading System”, Wall Street Journal (Europe), Oct. 7, 1997, p. 14, Brussels, BE. “Welcome to DRIP Central” at http://www.dripcentral.com (2

Trojan et al. Togher et al. Hawkins et al. Harris et al.

McCoy et al.

pages), printed Feb. 20, 2001.

Fraser Cristo?ch et al. McClelland et al.

www.itginc.com/products/posit/positimorehtm, Jun. 2000.

J.Z. Money, Apr. 1997, vol. 26, Issue 4, p. 82, Apr. 1997. Business Wire p. 0699, Feb. 29, 2000.

Lupien et al. King et al.

Robert Barker, A Capital-Gains Miracle Worker, Business Week, Jan. 31, 2000, p. 130. Anne Tergesen, Here Come the E-Funds, Business Week, Jan. 31, 2000, p. 125. 1998 ADP Investor Communications Services, ProxyEdgeTM 2000.

Clark et al. Hunt et al. Melnikoff

Wolfberg et al.

Campbell

Anonymous; Yearbook Supplement, pp. 95-99; Global Investor;

Debe et al. Bennett Barr et al.

1995; seven pages.

Anonymous; The 1996 guide to Switzerland Supplement, pp. 2-5; Euromoney; Mar. 1996; seven pages. Web Pages for “One Share of Stock Inc”; Internet web archive; Dec. 1996; ?ve pages. John Downes (Editor); Dictionary of Finance and Investment Terms; 1998; Barron’s Educational Series, Inc.; Fifth Edition; p. 455. Business Editors; Alaska Air Group Inc. Announcement; Business Wire; Sep. 1987; one page.

Spector Friend et al. Melnikoff Brown Dembo Hackel et al. Petruzzi Luskin et al. Garman

John C. Perham, Stock Exchange Explains Its Pay-As-You-Go Plan, Barron’s National Business and Financial Weekly, Aug. 24, 1953. Margaret Dibben, Just let your ?ngers do the dealing Cut-price ser

Lupien Ferstenberg et al. Maggioncalda et al.

705/36 R

Harris et al. Silverman Masch Chennault Nevo et al. Hartman et al.

idle rich, The Guardian, Oct. 23, 1994. Kathleen Pender, Stock Trading, San Francisco Chronicle, Jun. 23, 1986.

O’Shaughnessy

Ray et al. Jones et al. Stallaert et al. Deavers

.................. ..

705/37

Phillips et al. Wallman ................... ..

vices mean that calling your broker is no longer the preserve of the

95th Congress, 15’ Session Committee Print, Report on Banks Secu ritiesActivities of the Securities and Exchange Commission Pursuant to Section 1 1A(e) of the Securities and Exchange Act of 1934 (public

Williams et al. Black et al. Minton

Gullen et al.

705/36 R

11/2010 Haskins et al.

WO 98/44443 WO 98/44444 WO 99/28845

Durbin et al. Atkins

Rebane Kosiba Young et al.

705/36 T 705/36 R

705/36 R

Law 94-29), Aug. 1977, pp. 3-101, US Government Printing Of?ce, Washington, DC. Colby, Robert L. D., Response to Mar. 14, 1988 letter regarding “Exchange Act” from Spirer, Kenneth S., Apr. 14, 1988, pp. 1-12, Securities and Exchange Commission, Of?ce of Chief Counsel, Divi sion of Market Regulation, Washington, DC. Engel, Louis, et al., How to Buy Stocks, Eighth Edition, Little, Brown and Company, 1994, pp. 123-127, Canada. Elgin, Peggie R., SPDR web ensnares both active, passive fund managers. (Standard & Poor’s 500 Depository Receipts) (Invest ments & Bene?ts), Corporate Cash?ow Magazine, Dec. 1, 1993. Merrill Lynch, Pierce, Fenner & Smith Inc ., Merrill Lynch announces a break for the small investor, 1974.

US 8,099,344 B2 Page 3 Perham, John C., Stock Exchange Explains Its Pay-As-You-Go Plan,

Rosenblat, Alan, Response to Oct. 19, 1971 Letter to SEC from

Barron’s National Business and Financial Weekly (1942-Current

Reavis & McGrath, May 21, 1972, pp. 1-3, Securities and Exchange

?le), Aug. 24, 1953, 33,34 p. 6.

Commission, Of?ce of Chief Counsel, Division of Investment Man

R0 senblat Alan, Response to Oct. 19, 1971 letter regarding the “Plan” from Reavis McGrath, Apr. 19, 1972, pp. 1-5, Securities and

Exchange Commission, Office of Chief Counsel, Division of Corpo rate Regulation, Washington, DC. Rosenblat, Alan, Response to Dec. 5, 1974 Letter to SEC from Baron, Neil D., Nov. 23, 1975, pp. 1-8, Securities and Exchange Commis sion, Of?ce of Chief Counsel, Division of Investment Management Regulation, Washington, DC, 1975 Westlaw 11120. Rosenblat, Alan, Response to Dec. 5, 1974 Request for No-Action letter from Baron, Neil D., Nov. 23, 1975, pp. 1-14, Securities and Exchange Commission, Of?ce of Chief Counsel, Division of Invest

agement Regulation, Washington, DC, 1972 Westlaw 12253. Sharpe, William E, The Sharpe Ratio, The Journal of Portfolio Man agement, Fall 1994, NewYork, N.Y “Waste Management Announces Odd-Lot Selling Program,” PR Newswire, Jan. 9, 1990, retrieved from [URL:http://www.highbeam. com/doc/lGl -8028560.html]. “NYSE Will Use Crossing Network to provide After-Hours Trading.” Trading Systems Technology, vol. 4, No. 6, Sep. 24, 1990. Hasbrouck et al. “New York Stock Exchange Systems and Trading Procedures” NYSE Working Paper #93-01, Draft 1.2, Apr. 27, 1993,

ment Management Regulation, Washington, DC. Rosenblat, Alan, Response to letters of May 7, 1973 and May 13,

pp. 1-60.

1973 regarding Investment Data Corporation and SEC No-Action Letter from Dudley, John A., Jun. 15, 1973, pp. 1-7, Securities and Exchange Commission, Of?ce of Chief Counsel, Division of Invest

Maidenberg, H.J., “Futures/Options; Silver Climbs by Limit in a Shortened Session.” New York Times, Late City Final Edition ED, col. 5, p. 20, May 5,1987.

ment Management Regulation, Washington, DC, 1973 Westlaw 6859.

* cited by examiner

US. Patent

Jan. 17, 2012

10'

Sheet 1 0f 17

US 8,099,344 B2

USER lNPUT

ASSET ALLDCAUON MODEL

1

I 2 v“ PORTFOLIO smcnou Emma .

USER mPuT

I -

4

STORAGE

5

3RD PARTY

\-"\ mums

SYSTBA

_

'

amsAsE or

mamas,

aouos. ETC.

3 MCLEWNG HOUSE

FIGJ

3RD PAR”

PAYMENT m7

9mm

US. Patent

Jan. 17, 2012

Sheet 2 0f 17

US 8,099,344 B2

1. YEAR OF BIRTH: 2. YEAR OF RETIREMENT:

3. MARITAL STATUS (m/s): A. NUMBER OF CHILDREN:__________

5. 6. 7. 8. 9.

YEAR YEAR YEAR YEAR COST

nRsr CHILD ATTENDS ‘COLLEGE: SECUND emu) ArrENos COLL€GEz THIRD cRaw ATTENDS COLLEGE: FOURTH CHiLD ATTENDS COLLEGE: OF ONE YEAR OF COLLEGE: 3m

10. INCOME: 3”” n. uoulu ASS‘EISz5 r2. UABIUTIES: SW 13. SPOUSE YEAR OF BIRTH: ___.....____.

:4. ANNUAL INCOME NEEDED AT RETIREMENTz$ es. NUMBER OF EMNE; PARENTS TO CARE FOR: as. YEAR OF BIRTH or FIRST LIVING PARENT: 17. YEAR 0E BIRTH or SECOND ENINE; PARENT: 18. YEAR 0E BIRTH OF THIRD EMNc PARENT: 19. YEAR 0E BIRIH 0E FOURTH UVING PARENY; 20. ANNuAE COST OF CARE FOR LIVING pAREN’R-s

21. RISK EAcwR (1-10, WHERE 10 13 HEN):

F|G.2 OUTPUT OF ASSET 'ALLUCATION MODEL

TO REACH YOUR ANNUAL INCOME AT REUREMENT, GWEN IHE UMH'AUUNS AND NEEDS YOU HAVE SPECIFIED. YOU MUST FNVESY ANNUALLY IN THE FOLLDWENG MANNER: 1. LONG-TERM INYESTNENTS: $20,000

2. MEDIUM-TERM INVESTMENTS: $10,000 3. SHORT-TERM INVESTMENTS: $5,000

US. Patent

Jan. 17, 2012

Sheet 3 0f 17

US 8,099,344 B2

PORTFOLIO SELECTION EDITOR SCREEN 1. PRICE I0 WINGS

UIIII: .....__

2. CAPITAUZAIIOII FLBQR tHIIUUNS)Z___ 5. SPECIFIC SECTORS IELECOMWI‘BCMIUNSZ ___.__.. SOFIIMRE; _._..._.

00IIIPUI€R:_____ MANUFACTURING: ..._._.., CHEMICAL: .___._

BANKING". .____ TRANSPORTATION: . IIIEBICAL: .___.._

INSURANCE: __..__

REAL ESIATE: _.____. ENTERTNIIIIIENT: _ I.

cpn‘uga

' ___,..

m ENERGY: ...___ n. UTILITES: ._.....

EXCLUDE COIIIPANIES WIIII NEGATIVI. IMMGEMENI PRACTICES (SiE DEFINII'ION III ,HELP):___ EXCUIDE COMPANIES YII'IH NEGA'IIVi LABOR PRIUICIS (SEE D£FIIHTION IN HELP): .._______ EXULWE COMPANIES WITHIN] ORGNIIZED LABOR WORKFORCES: _.._....__

EICLUDE EIIIPLOYIIE OWNED COMPNIIIIS:

INCLUDE EIMRONIIENIALLY GREEN COMPANIES: .._...__ . INCLUOE ONLY DOIIIESIIC CGIIPMIIES:

J0. INCLUUE FORUGI OOHPNIES: II.RISK LIMIT REWNE I'O 58d‘ 500: I2. RATE DF RUURII UMETAIION REIATIVE T0 SM’ 500: ._.___..

F IG.4A

US. Patent

Jan. 17, 2012

coupon

Sheet 5 0f17

US 8,099,344 B2

212x RELAIWE I0 522 soc

mrrcacm RATE

(“m2 uomu mucs)

or 22mm: RELATIVE TO sop soo

(US! 22 moms) I.

2.52

0.91

402.

2.

25%,

039

0.95 0.94 0.93 0.92 no 1.12

m2

-52 ~62 -22 ~22. +102 +22%

9. common (2.52)

cos

4%

1o. ooomo J 2.5%.

0.20

402

n. comma K 252 :2. coupmn 2.52 :3. comm o 2.52 14. mom" a 2.5 1s. coomw o 2.52 16. coovmr P 2.52 12. oooiw o 2.52 18. comm a 2.52 19. coumw s 2.52 20. 002222212 2.52 21. comm u 2.52 22. comm v 2.52 23. coumo w 2.52: 214.com" x 252 25. couPmr v 2.52 2s. comm z 2.52 22. comm’ M 2.5% 22. comm #18 2.5% 22. cm cc 2.52 so. cowmv on 2.52 51. comma ME 252 32. comm As 2.52 as. comm no 2.52 34. ooopmv on 2.5%

02c us 1.5 0.2 1.4 2.2 1.01 029 1.15 1.? 1.22 1.55 um on 0.29 2.22 1.33 0.58 0.9 1.24 1.9 0.5 0.71 as

-2o% m2. +20% 45% +122 +102 +22 cm m: +252 +25% +20% 40% 4:52 42 +12% +222 4m oz +11% +292 402 452 40%

as. as. 17. 28.

coupmv m {2.52) COMPANY M 2.52) ammo ox 2.52 comm AL 2.52

0.92 0.92 as us

422 42 ‘m +102

29. cowmv m 222 40-. coupmv m 2.52

1.55 1.91

+252 +202

a. 4. s. c. 7. 8. couvmr H

25% 2 25%‘ 2.52 2.5% 2.5%

US. Patent

Jan. 17, 2012

x255% Q2

Sheet 6 0f 17

mguoE mm2agma

9a556, 5E2 a.

US 8,099,344 B2

US. Patent

Jan. 17, 2012

Sheet 7 0f17

mm

n25 .”. v

US 8,099,344 B2

wz?muo

5 5 0.6: 5am cw

h

4.4 Ema E?22zmQm om...

“.0:

@N mmmm

El 2%I

mmmm

US. Patent

Jan. 17, 2012

Sheet 8 0f 17

US 8,099,344 B2

E”?m

mowzum om .Emhmwno:m

255m... w

mm

m,3; \

US. Patent

Jan. 17, 2012

Sheet 9 0f 17

US 8,099,344 B2

l I

‘

SCREENS ACCESSED

BY USER AS PER

USER

A

FIGURES ABOVE FOR

:

,

W

pomrouo CREATION/ 11$ _ FWIRSTLEVEL. '

“owns-mow

rgggcg?iwc

4‘

PORIFOUG AS PER

44 ,

FIGURE SIX

FSCREENS ACCESSED

ABOVE

BY USER as PER

USER 9

FIGURES ABOVE FOR

5%?“

pomrouo CREATiON/ MODIFICATiON

SYSTEM _

4

AND

PROCESS

2

45

OR ‘FOR RECORDS

, l‘

mu

SCREENS ACCESSED

cRgé‘g'o“

BY USER AS PER FIGURES ABOVE FOR E PORTFOUO CREATION/ _

, PGRTFOUO

uomncmow

9 4s

47

US. Patent

Jan. 17, 2012

Sheet 10 0f 17

US 8,099,344 B2

FIG.10

US. Patent

Jan. 17, 2012

Sheet 11 0f 17

US 8,099,344 B2

51111111: 115511115 mom

‘USER SELEBIWNS AND 1110111111111, PORTFOLIO 1111051551110 15 PER 111; 10(111)

USER BY, RESULT

SECURIIT 11255131111111’ 8 KCURHY c,

01' mom

i

'

musmm

am‘ SELL wr 13111 e111 “SELL

um A

1011

1151611" B

'

usm c

21111 »

v

50

_

150

NUMBER 01-‘ TEAMS

I

2.

1

1m

__

so

H

151:1

1

2

>

100 5a

1

-

2

UNUER IRWIN“,

5mm P6511115 FROM

1.1311111911111111 0; 111 111.11 Pummus mmzssau 111R0us11 W M55111 mum's warm; 15150 11 as 10(49) 1011115

_ 250 so

zoo 2.011 11111150

1111 115211 was

‘ mo

o

111mm 0F TRADES

1

1

1

111111 11E P11552111

55a

1

1

1 '

MW ‘(MD METHHG}

11mm=z

_

1

-

H612

1

US. Patent

Jan. 17, 2012

Q2 v.5 n:

QQ2:gm3?8,.YEEE.,)

Sheet 13 0f 17

US 8,099,344 B2

5g a?“

: ,

9%@525a;1

520w5M2.8

= . .

3.5@2%?8

Q.Tgmvim.5)%:

2g3I.w)as:

US. Patent

Jan. 17, 2012

wmil . @205885 a?

Sheet 14 0f 17

US 8,099,344 B2

m9.

V605 “Q3 H 2“52m

ozEagem

.SEbo f.

,zo?wmw _

3

5 F.

Q2,

8 52ma s“ 85mg? 52 85.32 . $56

02

, we“?

SP

. .&a% @302 “$52.

I J

N2n9

26c

US. Patent

Jan. 17, 2012

Sheet 16 0f 17

US 8,099,344 B2

USER PC

? TELEPHONE m ‘\A "6

174

PAssxmn 2 mm we we

5

375

F|G.17

1175

US. Patent

Jan. 17, 2012

Sheet 17 0f 17

US 8,099,344 B2

selecting a portfolio of investments from a plurality of potential

investments options

1 181

l adjusting a desired risk-return characteristic of said selected portfolio

by adjusting a risk- return pointer using a graphical user interface IL device

132

l determining automatically by a processor a weighting of a plurality of

instruments in the portfolio to accommodate said adjusted risk-return IL characteristic

183

l transmitting one or more trades to implement an adjusted the

portfolio over a c|omputer network

FIG 18

1184