Note : Les descriptions sont présentées dans la langue officielle dans laquelle elles ont été soumises.
1 322055
PROCESSING SYST~M FOR MANAGING BI-MEDIA INVESTMENTS
Technical Field
The invention relates to data processing
systems and applications therof. More specifically, the
invention relates to business practice and management
and especially to finance, such as securities. Methods
and systems are disclosed for the creation and
management of pre-denominated negotiable drafts that.,
while unredeemed, provide investment-supporting
capability to an owner of record.
Background Art
Banks manaqe cust.omer funds in various types
of accounts, including traditional checking accounts in
~S which the customer is entitled to write checks in
amounts of the customer's select.ion and the bank
determines at. t.he time the check is presented for
payment whether the check will be honored, which i5 a
funt.ion of whether the customer has adequate credit or
money on deposit with the bank. Accordin~ly, the term
"check" is often understood to refer to a written
order, usually on a standard printed form, directing a
bank to pay money, in which the~order is prepared by the
bank customer or account holder. Because of the
informality with which checks can be written, checks are
.' ~
1 322055
considered to be short-term instruments, often being
limited in negotiable life to six months, by custom or
law.
B~nks, express companies, and the like also
05 provide drafts, which differ from checks in that a draft.
is drawn against the bank's own funds. Accordingly, a
much higher degree of reliability surrounds a bank
draft, as it is assured that the draft will be honored
when presented and that sufficient funds are held for
payment.
In order to provide to customers a more
flexible credit arrangement, banks provide letters of
credit, indicating the bank's willingness to pay upon
demand a certain upper limit of funds on behalf of a
customer.
Banks also provide "traveler's checks," which
are pre-denominated drafts against the bank's funds,
often requiring the purchaser's signature or duplicate
siqnature in order to make the draft properly
negotiable. Therefore, traveler's checks are very
similar to bank drafts in that the bank has received the
funds to support payment of the checks at the time t.he
checks are issued to a customer. Such drafts provide a
high degree of reliability and securit.y to all holders,
~:: 25 as they can be replacecl if lost by the oriqinal
purchaser, they do not become stale if held for long
periods of time, and they are supported by the ~unAs
held by an instit.ution that. is charged with knowledge of
their face value and outst.anding amount.
Banking and securities institutions have
created composite cllstomer accounts in which the
customer's funds are maintained in interest-earning
~ accounts against which the customer's checks may be
: drawn. Further deve~.oprl~ents of this type of account
have permitted customer funds to be invested in actual
1 322055
- 3 -
1 securities such as pooled income trusts. United States Patent
No. 4,346,442 to Musmanno discloses a system in which a
customer's funds are held in a securities brokerage account for
investment in a variety of securities, including money market
accounts. The Musmanno system permits the customer to draw
against the account by use of normal checks and charge cards,
with the management system ordering the liquidation of the
account in a preferred manner in order to satisfy transaction
or check charges. Similarly, the management system orders the
investment of incoming revenues in a preferred manner and
monitors the customer's credit limit. Such a composite account
offers improved management of funds with potentially greater
ready line-of-credit to the customer than would be available if
the customer were to isolate bank functions from securities-
brokerage functions.
The present invention offers a system of financial
management in which the account holder's funds are placed in
bi-media investments, including both a revenue producing
investment and a non-revenue producing, negotiable draft type
of investment, such that the customer's portfolio is
substantially entirely invested in each of the two investment
forms, as more fully explained in the following detailed
description. To achieve the foregoing and other objects and in
accordance with the purpose of the present invention, as
embodied and broadly described herein, the system and method of
account management of this invention may comprise the
following.
Disclosure of Invention
Against the described background, it is therefore a
general object o~ the invention to provide an improved
management system for investments, wherein
1 322055
each investment is represented in two media, one of the
media being revenue producing and the other being non-
revenue producing.
Another object is to provide a financial
management system that provides protection against loss
or theft of the non-revenue producing investment media,
while permitting such media to be alienated and
circulated among subsequent holders for extended time
periods.
A further object is to manage investment
accounts in such a way that certain investments are
identified as qualified for support of a second media
representation, and to issue appropriate second media
to the account holder.
A related object is to manage investment
accounts to protect the backing or collateral behind the
second media representations, such that the second media
always is supported in its value to ensure that such
media can be honored for redemption whenever presented
for payment.
Additional objects, advantages and novel
features of the invention shall be set forth in part in
the description that follows, and in part will become
apparent to those skilled in the art upon examination of
the following or may be learned by the practice of the
invention. The object and the advantages of the
invention may be realized and attained by means of the
instrumentalities and in combinations particularly
pointed out in the appended claims.
According to the invention, a processing
system for the management of financial and securities
accounts provides for investments to be represented in
two media, wherein the first media is a revenue
generating investment having characteristics that
qualify it for bi-media representation, and the second
- 1 322055
media is a negotiable draft investment drawn a~ainst an
issuer other than the account holder. The system
maintains account files for a plurality of investors
having bi-media investments, each investor's a~count
05 file containing current information identifying the bi-
media investments of the account holder. One or more
transaction entry means are provided for requestin~ that
the system authorize investment transactions to an
account file, one such transaction entry means being,
for example, a data input terminal operated by the
financial institution having the account files, and
another type of transaction entry means being a data
input terminal responsive to remote inputs, as from a
telephone keypad. An investment transaction generatin~
means is provided within the processing steps of the
system for responding to the transaction entry means and
initiating aquisition of a requested investment in the
first media to the investment account file. Then, in
order to create a bi~media investment that is at least
partially redundant in value with the first media
investment, the system includes a qualified investment
identification means that is responsive to the
transaction entry means for characterizing a requested
investment addition to the investment account file as to
qualified nature. The qualified investment
identification function may be performed by the mere
acceptance of a requested investment in a system that
handles only fully quali~ied investments; by the
selective identification of qualified investments in a
system that responds to both qualified and non-qualified
investments; by the identification and rating of
qualified investments in a system that accepts various
de~rees of qualification; and by combinations of the
above noted methods. In response to the qualified
investment identification means, a second media
1 3~2~55
-- 6
investment generating means initiates the associated
aquisition of the requested investment in the second media
to the investment account file, to the degree that the
requested investment has been determined to be qualified for
bi-media treatment. A means for updating the investment
account file then responds to the qualified investment
identification means, the investment transaction generating
means, and the second media investment generating means to
show the bi-media nature of the requested investment.
Accordingly in one aspect the invention provides a
system for supervising and processing buy- and sell-
investment transactions of bi-media investments in a
plurality of investment accounts, wherein a bi-media
investment comprises both a first-media-investment of
revenue generating character having a predetermined
qualified value for bi-media representation, and a second-
media-investment of a negotiable draft character, issued by
and drawn against a financial institution or associated
entity other than the investor, the present and future value
of which said system creates, manages, and ensures to be
fully supported against the qualified value of the first-
media-investment, said system comprising: a first
investment account file containing current information
identifying bi-media investments of a first account holder
transaction entry means for requesting execution of buy- or
sell-investment transactions in said first investment
account file; investment-transaction-generating means
responsive to the transaction entry means for initiating a
requested buy- or sell-investment transaction of a first-
media-investment in said first investment account file;
qualified-investment-identification means responsive to said
transaction entry means for characterizing the requested
first-media-investment as to predetermined qualified value
...6A
,, .
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second-media-investment-generating means responsive to a
determination by the qualified-investment-identification
means of said predetermined qualified value of the requested
first-media-investment for initiating execution of an
investment transaction of a second-media-investment of
negotiable draft character, issued by and drawn against a
financial institution or associated entity other than the
investor, the present and future value of which said system
creates, manages, and ensures to be fully supported against
the qualified value of the first media investment, of a
value corresponding to the predetermined qualified value;
and means updating the investment account file in response
to the qualified-investment-identification means, the
investment-transaction-generating means, and the second-
media-investment-generating means, showing the status of the
resulting bi-media investment.
A further aspect of the processing system
differentiates between first and second media additions to
the investment account, in response to inputs from the
transaction entry means. A second media addition by
transfer of a draft from a different investment account is
responded to without issuing another draft, since each
investment is represented only once in second media. When
the processing system recognizes an addition to an
investment account by addition of a previously issued draft,
an earnings transfer indicating means may respond by
indicating that the earnings of the associated first media
investment are to be transferred to another account of the
processing system for a limited, selected period of time.
In this way, the costs of operating the bi-media system may
be recovered at times that ownership of the second media
investment is transferred, such as by directing a portion of
the associated first media investment's earnings to the
...6B
~?`A
- 6B - 1 322055
account of the financial institution or draft issuer.
Accordingly, the earnings transfer indicating means also may
operate when a first media investment is made to an account
and new second media are authorized for original issue to
the account holder.
Still another aspect of the processing system is
that second media drafts may be alienated in title
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from the holder of the account without alienating the
first media investment supporting the issuance of the
second media investment. This result may be reached
when the processing system detects via a draft title
monitoring means that a draft is transferred or sold
from an account without being redeemed or entered into
another account within the sytem. As a practical
result, the account holder continues to obtain the
benefit of the bi-media investment despite the fact that
one representation of the investment has been used to
satisfy an outside obligation. At the same time, the
system promotes and supports retention of a transferred
draft by an outside party by limiting the alienability
of an appropriate value of first media investment in the
account holder's portfolio. In this regard, the nature
of the second media investment as being a draft is
important, because a draft in the nature of a traveler's
check or similar instrument is undated and does not
expire or become stale in the conventional manner
associated with the checks of private individuals.
While the second media is frequently referred to as
being for "drafts," the nature of a draft is not limited
to a printed or written bill, but may include
electronic, magnetic, or other media.
The processing system also manages the
redemption or liquidation of first media investments in
response to the transaction generating means. The
qualified investment identification means may respond to
the transaction generating means by characterizing the
investment as to qualified nature, and in response to
such characterization, a non-negotiability indicating
means may indicate on the account file that a
corresonding value of second media investments in the
file is non-negotiablé.
The accompanying drawings, which are
1 322055
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1 incorporated in and form a part of the specification illustrate
preferred embodiments of the present invention, and together
wit:h the description, serve to explain the principles of the
invention. In the drawings:
Brief Description of Drawings
Figures 1 and lA are a schematic flow chart showing
the functions performed by the processing system especially
with regard to the aquisition of investments to an account.
Figures 2 and 2A are a schematic flow chart showing
the functions performed by the processing system especially
with regard to remote or telephone inquiries to the system.
Figures 3 and 3A are a schematic flow chart showing
the functions performed by the processing system especially
with regard to the sale of investments from an account.
1 322055
g
1 Best Mode for Carrying Out the Invention
The present system for processing and supervising
investment accounts is best understood against a general
background of how a financial institution presently may manage
an investment account. The term "financial institution" refers
to a bank, an investment banker or securities broker, or a
combination of such entities who serve their investor customers
by placing the investor's money in an account, fund, security,
or business activity that is expected to provide a benefit to
the investor. Within the contemplated scope of a financial
institution's activity are matters as simple as a bank's
accepting deposits into a savings account and subsequently
lending the investment funds at a higher rate of return in
order to cover the interest obligation on the savings
account. On the other hand, the more complex operation of
various money market funds and pooled trusts managed through a
variety of institutions such as insurance companies, mutual
fund managers, banks, thrift institutions, and investment
bankers also is included. The "investor" with the financial
institution is an entity having an account, typically
identified by an account number, in which the account entitles
the investor to certain rights. Such rights may be, at the
minimum, the right to transact business on a cash basis with
the financial institution. In other instances, the right may
include the conduct of credit transactions, such as through a
margin brokerage account.
A financial institution may manage investor
accounts by maintaining for each investor an individual
account file showing transactions to the investment
account. Periodically, such as daily, the account is
updated to show transactions. The account file may include
special instructions or pre-arranged investing
1 322055
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schemes to provide for the automatic investment or
liquidation of funds, which may include incoming
revenues such as additions made by the investor or
earnings from investments in the account. Account
earnings, sale proceeds, other forms of incoming
revenue, and new deposits by the investor may be
referred to as "cash additions" to the account and are
recognized at the times that the account file is
updated. Cash additions may be applied first to pay
debits against the account for fees of the financial
institution, credit charges, interest charges on margin
accounts, and the like, after which the balance of the
cash addition may be deposited in a liquid, interest
earning or dividend earning fund such as a money-market
fund. A periodic statement is issued to the account
holder showing all transactions since the last
statement, including cash additions, debits, automatic
payments into or out of a money market fund, the present
net worth of all investments in the account file, and
any loan balance or credit.
The present processing and supervisory system
is best suited for use with investment account files
that relate, at least in part, to liquid, revenue
generating investments, which may be considered to be
those investments that can be at least partially
liquidated on a daily or other short term basis.
Accordingly, investments such as savings accounts, money
market funds, and pooled trusts are well suited for use
with the system. A further desirable feature of this
type of investment is that the principal balance
generally is not subject to decline in value. A margin
brokerage account or an account having a line of credit
also is suited for use with the system, since credit may
be extended within an established limit, such as a
percent of security value, on a daily basis.
,;
1 ~2~055
Certain types of investments that do not share
the security and stability of the mentioned savings
account, money market fund, or pooled trust also may be
- used within the discretion of the financial institution
oS and the limits that may be established by regulatory
bodies. Thus, stocks, bonds, options, and other
investments commonly subject to fluctuations or not
considered to be liquid on a daily basis may be
supported within the system on a basis similar to that
used in a mar~in brokerage account, wherein a specified
percentage of the investment value is considered to be
secure enough to support a loan.
The term "qualified" will be applied to those
investment vehicles that have the requisite liquidity,
safety of principal, or other characteristics such that
a financial institution authorizes the use of such
investment vehicle to support bi-media representation
within the supervisory system, while other investment
vehicles are termed "non-qualified."
The system creates and controls a bi-media
investment from qualified investments of an investor's
account, wherein the first media is a revenue
generating, quali~ied investment such as money market
shares, and the second media is a neqotiable draft
instrument issued by the financial institution or other
associated entity who hereinafter will be called the
"issuer." The investor's funds therefore are present in
two forms, one being a revenue producing investment
capable of generating interest, dividends, or other
revenue, and the second being the draft of the issuer
that may be transferred separately from the underlying
qualified investment. Such draft is preferred to be
pre-denominated in standard denominations, serial
numbered for individual indentiication, and transfer-
protected by the requirement for an investor to grant
1 322055
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authorization before the draft may be negotiated. A
presently existing draft having these characteristics is
the traveler's check, which requires a duplicate
signature of the original owner before the traveler's
05 check may be redeemed. The preferred draft may require
additional features, such as that the investor's account
number be recorded on the draft, and, in addition, each
draft may be assigned a code number specific to t~e
investor and to the specific draft belongin~ to the
identified investor. The draft therefore constitutes a
second media of the investment, fully alienable from the
first media, with the issuer being responsible for
payment. The supervisory system must assure that each
draft is validated and backed by a suitable underlying
investment so that the draft may be redeemed by the
issuer and the cost recovered from the investment
account of the investor owning the draft according to
the records of the financial institution.
The supervisory system manages the investor
account through the course of a variety of situations
that broadly may be categorized as "buy" situations and
"sell" situations. Within those two categories, "buy"
situations might include both cash additions to the
account and draft transfers into the account, and "sell"
situations might include the liquidation of a pre-
exi~ting first media investment and the liquidation or
redemption of a draft. These situations are managed
during the routine periodic processing of investor
accounts, such as on a daily listing and processing of
transactions. In addition, the system provides a
continuous supervisory function over all issued,
outstanding drafts to enable the negotiability of any
draft to be determined by telephone or other types of
remote inquiry, and in certain instances, the system
will report special status of a draft to the investor.
1 322~55
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At the origination of many investor accounts
and at various times subsequent thereto, a "buy"
situation will arise by cash addition to the account.
As a preliminary matter, therefore, the account may be
assumed to have been established by assignment of an
account number and entry of personal data regarding the
investor. In addition, for purposes of the present
system, the investor is provided with a confidential
code number, other than the assigned account number,
that is capable of identifying the investor and his
account. The account also may contain standard
investment instructions for handling any uncommitted
cash balance, such as to immediately purchase a
specified investment such as a money market fund with
the cash balance.
Upon the receipt of a cash addition, the
financial institution will enter relevant information
into the system via a transaction entry means such as a
computer terminal, and the system will call the
investor's account file from the sytem data base,
perform updating calculations, such as to determine any
limitations on the transfer of investments, and then,
via an investment transaction generating means
responsive to the transaction entry means, review the
information entered by the financial institution to
determine the nature of the transaction that has been
requested and whether the transaction i~ based upon a
change in the status of first media or second media
entries in the account file. Having determined, for
example, that a "buy" order has been requested based
upon a cash addition, the system will indicate execution
of the "buy" order and then refer to a qualified
invest~ent identification means, such as a data file
listing of qualified investment information in the data
base, to determine whether and to what extent the
t 322055
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requested investment is qualified for bi-media
representation.
The purchase of a qualified investment will
cause a second-media investment generating means within
05 the system, responsive to a determination by the
qualified investment identification means, to further
determine from the investment account file whether an
unused additional balance from previous qualified
purchases is available to buy second-media investments,
to increase the present balance by such amount, and to
initiate the associated aquisition of the requested
investment in the second media to the investment account
file by selecting a draft or combination of drafts to be
issued to the account holder within the available
qualified balance. The system may follow special
instructions in the account file regarding acceptable
denominations of the issued drafts and return any
remainder of the qualified balance as a carried-over
"draft buy balance" on the account file. The selected
drafts are indicated to be issued to the account holder
and are the second media representation of the qualified
investment; and then an updating means responsive to the
qualified investment identification means, investment
transaction generating means, and the second media
investment generating means shows the bi-media nature of
the requested investment by recording the draft serial
or other identification num~ers and denominations on the
investor's account file together with certain
limitations described below.
- 30 The operation and maintenance of the
supervisory system with regard to the administration of
the drafts may involve special costs to the financial
- institution, including compensation to the draft issuer
and its agents and to draft redeeming agents. In
addition, certain losses are expected by fraud or theft.
1 322055
By placing limited-term restrictions on the issued
drafts and the underlying qualified investment, the
financial institution may pay these and other costs of
the system through the system itself, without imposing
special commissions against the "buy" order. This may
be accomplished, first, by coding the drafts at the time
of issue in the data base file and investor file to be
non-negotiable for a limited term, such as for a period
of days. Second, the associated qualified investment
- 10 may be coded to transfer its earnings to the issuer or
other account for the period that the draft remains non-
negotiable. The system may bring about this result by
use of an earnings transfer means that responds to the
second media investment generating means for crediting
the earnings of the associated first media investment to
an account other than that of the investor, for example
to an account for the financial institution or issuer
when the second media is acquired in response to a first
media addition to the investor's account. Thus, the
underlying qualified investment pays for the charges
relating to the draft system by a limited term transfer
of earnings.
A "buy" situation may occur by the transfer of
a draft into the investor's account, indicating that the
investor has acquired a draft from another customer of
the issuer and, additionally, that the investor is
keeping the transferred draft, as contrasted to
redeeming the draft and making a cash addition to the
account. When the system receives a buy order from the
transaction entry means, the system employs a
differentiating means to determine when the addition to
an account is by transfer of a second media investment
from another investment account within the system and
when the addition'to the account is by other than a
second media transfer, such as by a cash addition. When
1 322055
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the differentiating means determines that the addition
is by cash or otherwise is not by transfer of title to
an existing draft from another account in the system,
the second media investment generating means is
05 responsive to the differentiating means to initiate
acquisition of an additional investment in second media,
to the extent that the first media investment addition
is qualified. Thus, when the addition to an account is
by first media investment, the system provides for the
possible acquisition of an associated, corresponding
second media investment.
On the other hand, when the addition is by a
transfer of title to a second media investment into the
investor's account from another account in the system,
the system will not acquire a corresponding second media
investment. Instead, the system utilizes an earnings
transfer indicating means that is responsive to the
media differentiating means for creAitin~ only the
earnings of a newly acquired, corresponding first media
investment from the transferee's account into a
different account within the system. The transfer of
first media earnings may be to the account of the
financial institution or issuer for a limited period of
time, after which the earnings may accrue to the account
of the transferee. Thus, when the addition is by
transfer of title to a draft from another account in the
system, the system requires acquisition of a first media
investment to support the transferred draft and may
transfer the earnings of the newly acquired first media
investment for a limited period of time.
Two types of investors might be involved in a
draft transfer, the first being the normal investor and
the second being the special status investor. The
latter type is a~ticipated to be a bank or others who
are in banking-related business and thus are relied upon
.
1 322055
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by the issuer to cooperate in liquidating drafts for the
normal investor. The special status investor account is
identified by a unique type or series of account numbers
such that the system recognizes the special status.
When the supervisory system receives entry of a buy
order together with the identity of a draft to be
transferred to the investor's account, the system
permits execution of the buy order only with respect to
qualified first media investments, as such may be
identified in the system data base. In this way, the
underlying investment for the draft remains a qualifed
investment when a draft transfers between investor
accounts. The system may permit the transferee investor
to designate the qualified investment, but with a
specified qualified investment desi~nated as the default
value if a proper qualified investment is not given,
such default value being one of the previously mentioned
standard investment instructions of the investor account
file. The system then may check the transferee
investor's account number to determine whether special
status has been granted. If so, the system may directly
update the draft file and the investor account
information for the transfer of the draft and the
purchase of the qualified investment, with the result
that the special status investor immediately earns full
proceeds of the qualified investment and the draft
immediately is negotiable according to the account file
of the special status investor, thus enabling the
special status investor to earn a return on having
handled the draft while forwarding the draft to the
issuer or holding the draft for resale. However, if the
supervisory system determines that the investor is not a
special status investor, the draft will be coded in the
file as being non-negotiable, and the qualified
investment will be coded to transfer earnings to the
t 322055
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issuer or other account for the limited term as
described above, after which the investor's account is
updated to reflect the new first media investment and
new draft entry.
05 "Sell" situations may involve either the
liquidation of a first media investment or the
redemption of a second media investment. Accordingly,
when the transaction ~enerating means has determined
that the requested transaction is a "sell" request, the
system determines from the entry data and account file
which of a draft or a qualified investment is to be
sold. If a draft is to be liquidated or deleted from an
account file, the qualified investment identification
means must assure that a corresponding value of first
media investment also is sold to cover the amount of the
draft to the issuer. The system may accept a specific
instruction from the account holder to liquidate a
specific first media investment, or the system may
follow a standard instruction in the account file to
liquidate a predetermined first media investment. ~pon
such liquidation, the system shows the sale of the first
media investment and the redemption of the draft in the
investor account file, and a draft title monitoring
means responds to the transaction entry means to show
the retirement or change of ownership information
relating to the draft. When a draft is transferred to
another account holder within the system, the
transaction is treated first as a sell order from the
first account and next as a buy order to the seeond
account, as described above.
When a sell order relates to a first media
investment rather than to a draft, the qualified
investment identification means determines from the
investor account file whether the inve~tment is
~5 qualified and supports an issued draft. The sale of a
.- , . .
.
~ 322055
--19--
non-qualified investment immediately is authorized for
execution and the account is updated. However, when a
qualified investment is to be sold, the second media
investment qenerating means is responsive to the
05 qualified investment identification means, now to
determine an appropriate identity and value of issued
drafts to be cancelled or held non-negotiable pending
cance]lation. The system may accept a listing of drafts
selected by the account holder, determine the value and
negotiability of such drafts from the account file, and
cancel such drafts in preference to others, or in
default of such selected drafts or if their value is
inadequate, the system may select drafts from the
account file until a sufficient balance of draft values
is identified to meet or exceed the value of the first
media investment to be liquidated.
The selected drafts are marked for non-
negotiability on the investor account file and any
excess value over the value of the first media
investment is added to the draft buy balance stored with
the account file. Sale of the first media investment is
authorized, and the investor account file is updated
with a flag showing that the proceeds of the first media
investment are to be held by the financial institution
until the investor returns the selected drafts to the
financial institution or issuer for cancellation. A
further entry may be made by the financial institution
or issuer when the drafts are received for cancellation
ta lift the flaqs on payment of proceeds and reflect on
the account file that such drafts are fully cancelled.
With respect to either buy or sell orders,
several situations common to brokerage accounts are
taken into account by the supervisory system. Certain
investments, such as stocks, might be unsuited to be
considered fully qualified. In addition, marqin loan
1 322055
-20-
accounts and lines-of-credit are used to support
investments. Any of these types of investments or
account features may be considered to be partially
qualified investments, capable of supporting the
issuance of drafts to a specified percent of the stock
or loan value. The system data base may be provided
with a file that lists all qualified investments that
will be accepted by the system, with each entry having a
percent of qualification ranging from zero through one
hundred percent. The portion of an investment value
that is qualified then can be determined immediately,
and the existing investments in investor accounts can be
updated by the system to monitor changes in qualified
percentage values. Following the system operation as
described, partially qualified investments may support
drafts in buy or sell situations up to a maximum of the
qualified portion of the investment value.
The ability of the supervisory system to
permit transfers of drafts between investors and to
provide a high degree of security to any transferee may
operate by permitting telephonic or other electronic
inquiries to be made into the system records from remote
locations. Presently known systems allow inquiry into
account records by telephone key signals representing an
account number and inquiry code or the like. Utilizing
such known technique for accepting an inquiry and making
a response, the present system may permit remote inquiry
into the negotiability of any draft that has been
issued, upon the system's receipt of the draft number
and, optionally, the investment account in which the
draft is recorded and the investor's specific code
relevant to that draft. A synthetic voice response may
indicate that a draft is negotiable if the draft is
shown to be so on the account records, or the response
may be that tha draft is non-negotiable if, for any
~ 322055
-21-
reason, the records indicate a problem.
Further, the system may permit remote
authorization for transfer of title to a draft, either
to another account holder or to a non-holder. Such
transfer may require certain security measures, such as
receipt of the transferor's confidential code and, in
applicable circumstances, the account number and
confidential code of the transferee. The transferor may
be required to give to the transferee his specific
confidential identity code relating to the draft being
transferred to enable the transferee to contact the
supervisory system, submit the transferor's confidential
code as provided, and subsequently create and enter a
new code to protect himself against loss of the draft
back to the transferor.
When the transfer is to a non-holder of an
- account with the financial institution, the draft title
monitoring means permits the draft to be alienated from
the investor's account without alienating the
corresponding first media investment from the investor's
account. The corresponding portion of the transferor's
first media investment may be frozen in the transferor's
account, pending redemption of the draft or further
transfer of the draft to an account holder with the
institution. In the mean time and for a limited time
only, such as for no more than three years, the draft
title monitoring means may permit the transferor to
continue to receive the full or partial earnings of the
frozen first media investment, although the system
prohibits both the draft and first media investment from
being liquidated in response to further orders of the
account holder. The financial institution also may
receive some or all of the earnings of the frozen first
media investment.
The second media portion of the investment
- 1 322055
-22-
account files are accessed for purposes of reporting
draft negotiability status. In connection with each
draft identification number are stored the account
number of the last known holder, or, if appropriate, the
05 fact that the draft is owned by a non-holder of an
account, one or more inquiry counters for monitoring the
information and transfer requests relating to each
draft and various flag files for indicating any of a
variety of limitations on negotiability of the ~lraft.
The various counters protect a~ainst the use of remote
inquiry means by unauthorized persons for improper
purposes such as to determine an account holder's
confidential identity code or draft identification
codes, or to determine the correct account number for a
specified draft, or alternatively, to prevent
determination of what drafts might be in a specific
account. Each type of counter may be set for a
different selected limit that, when reached or exceeded,
will cause the setting of a flag that causes the system
to refuse negotiability or further response, thus
preventing the use of the remote inquiry means in
connection with the draft until the flag is removed.
The various flags may include other indicators such as
indicators for lost or stolen drafts, cancellation or
redemption of a draft, transfer of a draft to a
nonholder of an account, or any other condition that
limits free negotiability of the draft on the account
record.
When a holder loses a draft, this fact may be
reported by coded entry to set an appropriate flag.
Lost drafts may be frozen for a term, during which time
the earnings of the corresponding first media investment
may be retained by the financial institution, for
example to cover related c09ts and liability. Further,
the system may provide protection against the holder's
1 322~55
combined loss of confidential identity code, draft
identity codes, and draft numbers. The system may
permit the holder of record to freeze a draft by
reporting or reconfirming periodically, such as
annually, the loss of such data. Thus, even though the
system may receive proper information from a thief to
authorize a change of ownership as described below, the
draft would remain unredeemable at the financial
institution until true ownership is resolved.
Draft transfer requests require that the
system access the investor account file for the
transferor and, if appropriate, the transferee~ The
transferor's confidential identity code is required
before a remote transfer request is permitted to access
the account file, with the transaction being rejected if
the account number and code do not properly correspond,
in addition to which the inquiry counter will note the
rejection. The confidential code of the transferee also
may be required and checked against the transferee's
account file as a precaution against transfer of a draft
into an incorrect account. Whenever errors in draft
transfer request cause a draft to be declared non-
negotiable for purposes of remote electronic transfer,
the system requires that the account holder or other
owner personally appear before the issuer or its agent
in order to restore negotiability by clearing the flag
that i9 raised in the supervisory system.
The system may protect the investor from
abuses of the remote inquiry function by preventing
disclosure of the reasons why a draft has been deemed
non-negotiable. When a remote inquiry is made
concerning a draft that has acquired non-negotiable
status, the system may respond to further remote
inquiries by reporting the presence of flags as making
the draft "non-negotiable", but without a statement of
1 322055
-24-
cause. However, the complete list of reasons for non-
negotiability may be reported on the investor's periodic
statement.
The supervisory system may f~rther monitor the
05 condition and existence of drafts by requiring the
holder/investor periodically to confirm that each draft
remains in his possession. This n)ight be done by
requiring the investor to submit by telephone the
confidential code relating to each draft individually.
Alternatively, the confirmation might be done by passing
each draft through a magnetic reader that confirms the
identity of the draft through telephonic communication
to the supervisory system. Drafts that are not
confirmed by the holder/investor may be deemed lost, but
if not made non-negotiable by the investor, will be
subject to redemption by anyone appearing to be a holder
in due course after a specified term such as three
years.
In summary, a draft always will remain
redeemable by the original investor, who has proper
personal identification as well as the correct draft
identification code number. A draft is redeemable by
anyone having the correct code number corresponding to
the draft, as long as the draft is not flagged non-
negotiable. A draft is redeemable by any holder in duecourse after a specified term such as three years, if
personally presented.
The following examples, which refer to the
drawings; will serve to demonstrate the structure and
operation of the supervisory system.
Example 1. Investor A establishes an
investment account with financial institution F and is
assigned an investor account number filling a field of a
specified number of digits, such as a nine digit field,
for example account no. 12345678~, and a confidential
1 322055
-25-
identification code number filling another field, such
as a four digit field, for example identification code
no. 9999. As standard investment instructions, the
account file lists a money market fund as being the
automatic "buy" investment for all cash additions to the
account, unless other instructions are given. The same
money market fund is identified for any required
liquidations. The fund is one hundred percent qualified
for bi-media representation, which fact is recorded in a
system data base that includes each possible investment
handled by institution F, together with a variable, Q,
that indicates the percent of qualification of the
associated investment.
Investor A adds an initial investment of
$100,000 to account 123456789 by cash addition presented
to an agent of institution F, ~ho enters the investment
via a transaction entry means 10, Figure 1, instructing
the system that the money market fund shares are to be
purchased. The transaction entry may be in a format
that will be recognized by the supervisory syste~ as
including within a pre-established sequence of data
fields the investor account number, a transaction code,
a value for the transaction, a media identification, and
an investment identification. Thus, the entry might
appear as 123456789, Buy; $100,000; Cash; Money Market
Fund. Possible entries for the transaction code might
include not only the indicated "buy" code, but also a
"sell" code and a "flags" code.
The system recognizes at block 12 from the
transaction code that the entry does not contain an
instruction relating to placing or lifting flags.
Consequently, processing advances to an investment
transaction generating means at block 14, where the
transaction code is recognized to be a "buy" code rather
than a "sell" code. Then at the first and second media
1 322055
-26-
differentiating means of block 16, the buy order is
recognized to relate to a cash addition, or first media
buy transaction, rather than to a transferred draft, or
second media transaction. At block 18, the transaction
generating means authorizes execution of the requested
buy order for the amount indicated and for the named
investment.
As the system advances to block 20, the
qualified investment identification means calls upon the
investment file in the system data base and compares the
named investment with the listing of investments in
order to determine whether a second media investment
also is to be authorized. This determination is made by
seeking the variable Q in the data base, and determining
whether this value is greater than zero. Finding that
the money market fund is listed as a 100% qualified
investment (Q = 100), the system advances to block 22,
where the variable QBUY is set equal to the product of
the investment amount (variable IV, as entered with the
transaction), $100,000, times the percentage of
qualification, Q = 100~, producing a value for the
qualified portion of the purchase equal to $100,000.
Then, at block 24, the second media investment
generating means calls upon the investor's account file,
which is a further section of the system data base, to
obtain any value of a carried over draft buy balance,
variable DBB. This variable i9 given a new valùe equal
to its old value plus QBUY.
Subsequently~ at block 26, the second media
invefitment generating means creates from the available
unissued drafts, as listed in a comprehensive draft file
within the data base, a variable list file DLIST,
containing the identification or serial numbers and
values of selected unissued drafts that are within the
amount of variable DBB, thus creating a list of drafts
1 322055
that may be issued to investor A as the second media of
his money market investment. At block 28, the total
value of the file DLIST, which is DT, is compared to the
value of DBB to assure that DT is not ~reater than DBB
and thus to prevent drafts from being issued in excess
of the authorized draft buy balance DBB. If the
variable DT is larger than DBB, the second media
investment generating means returns to block 26 to
recreate DLIST. If the value of DT is not greater than
DBB, the second media investment generating means
advances to block 30 and resets variable DBB equal to
itself minus DT. For purposes of this example, it may
be assumed that for investor A's purchase, DLIST arrived
at a listing of one hundred draft numbers, each draft
having a face denomination of one thousand dollars. DBB
therefore is unchanged from its original value in the
account file, which may be assumed initially to have
been zero.
Subsequently, the items of the draft list are
assigned a confidential code number, specific to each
draft, at block 31. The confidential code is to be
known by investor A, and, thus, may be established in a
predetermined pattern known to investor A by
prearrangement at the time the account was opened. For
example, the confidential code may be a four di~it
number representing the sequential position of the draft
on investor A's periodic statement of account. Thus, if
the drafts presently identified in the draft list are
investor A's first drafts, the confidential codes may
30 begin with 0001 and be numbered upwardly to 0100. It
may be noted that each draft may have its identification
or serial number indicated on its face, but the
confidential code number is not available to be read or
detected from the draft itself.
Advancing to block 32, the second media
1 322055
-28-
investment ~enerating means generates an issue order
that authorizes issuer I to issue the contents of DLIST
to investor A. An earnings transfer indicating means
than creates at block 34 a flag restricting
negotiability of the contents of DLIST, together with a
flag on the new first media investment indicating that
the earning of the investment for a specified period,
for example five days, is to be transferred to another
specified account of institution F. The specified
account may be one from which expenses of institution F
and issuer I are paid in relation to the second media
investments.
The system advances to block 36, where an
updating means updates the account file for investor A
to show the new first media investment purchase,
including the serial numbers of the drafts that have
been issued, the second media investment authorized, and
the various flags placed on the first and second media
investments. The draft file in the data base is updated
to include the appropriate confidential code that has
been assigned to each draft newly issued to investor A.
The money market fund purchase is noted in the account
file to be one hundred percent qualified. The
confidential code numbers specific to each draft also
are noted in the investor's account file. Finally, at
block 38, the system terminates processing for the
transaction.
As indicated at block 20 of Figure 1, if the
first media investment had been non-qualified, the
qualified investment identification means would have
permitted the system to bypass blocks 22-34 and enter
the purchase on the account file without special
restriction flags and without an indication that the
investment was qualified, as no second media investment
would have been generated to correspond to the non-
1 322055
-29-
qualifled first media investment. However, any
q~alified portion of a first media investment for which
second media drafts are not issued is carried over in
variable DBB and the first media investment therefore
5 will be flagged and indicated to be qualified at Q% of
the investment value IV as shown at block 22. Thus, at
block 20, the value of a partially qualified investment
may be split according to the value of Q, the percentage
of qualification, with the qualified portion being
processed through blocks 22-34 as described above.
Example 2. Investor A of the previous example
is presented with draft number 77-555-3333 having a face
denomination of $500.00 by investor B, who also has an
account with institution F and who is purchasing goods
from A. Investor A uses the remote inquiry service of
institution F to determine whether the presented draft
is negotiable. Using the key pad of the telephone to
enter data after calling a transaction entry telephone
number, investor _ enters a transaction code, a draft
serial number and confidential draft code number, an
account number provided by investor B, and a transaction
entry symbol such as "#" from the telephone keypad.
This data is received as a remote entry at the
transaction entry means of block 40 of Figure 2 and is
recognized by the data fields that have been established
by the system for such remote entries. The system
accesses the draft-related information from the data
base account file where the draft is recorded and, at
block 42, increases an inquiry counter by one. Then at
block 44 the counter total is compared to a pre-
established limit for this counter to determine whether
a flag should be set on negotiability. Advancing to
bloc~ 46, the system determines from the entered
transaction code whether the inquiry relates to a
transfer or to a request for information. In this
1 322055
-30-
example the inquiry is for information and the system
advances to a negotiability indicating means that starts
at block 48 to confirm that the draft is shown to be in
- the account of investor B as entered in the data field.
05 If the account number and draft identification number do
not correspond, the negotiability indicating means
branchs to block 50 and requests re-entry of the
transaction at block 40. However, if the numbers
properly correspond, the negotiability indicating means
will advance to block 52 to determine whether any flags
are set. If no flags are set, the system advances to
block 54, where the draft is reported to be ne~otiable;
while if a flag is set, the negotiability indicatng
means advances from block 52 to block 56, where the
draft is reported to be non-negotiable. Finally, at
block 58 investor B's account file is updated from
either block 54 or block 56 to record the inquiry, after
which the system terminates processing at blocX 60.
Investor A has received a report that the
draft is negotiable as a result of the above inquiry and
determines that he will accept the draft and will keep
it as an addition to his investment account. Investor A
therefore telephones the remote transaction entry
number, and he and investor B enter a transaction using
the telephone key pad with the following information
placed in data fields: a transaction code for transfer,
investor B's account number, investor B's confidential
personal identification code, draft number 775553333
plus the confidential code corresponding to that draft,
investor A's account number, investor A's personal
confidential code, and a transaction entry symbol. The
system again advances through blocks 40-46 as previously
described, now determining at block 46 that the
transaction code calls or a transfer of ownership, and
therefore the system advances to block 70 where the
1 322055
-31-
draft transfer means begins. At block 70, the draft
transfer means checks the transferor's account number
and confidential code for proper correspondence, any
error causing the system to branch to block 72 and
request re-entry of the transaction at block 40. If the
transferor's account number and code agree, the system
advances to block 74 where the negotiability indicatng
means checks negotiability of the draft, branching to
block 56 to deliver a message that the draft is not
negotiable if the file shows a flag, fails to list the
draft, or finds that the draft's code number does not
correspond to the draft's serial number. However, if
block 74 finds the draft to be negotiable, the system
reviews the transaction entry at block 76 for an account
number and code for a transferee account holder,
requesting entry of such account information at block 78
if none was originally provided.
If no transferee account holder is indicated,
the transfer is assumed to be to a non-holder, and
starting at block 80 the system employs a first and
second media title alienation means. At block 80, the
transferor's account file is flagged to indicate that
the draft is transferred and cannot be liquidated by the
transferor, and a corresponding value of first media
qualified investment is flagged against liquidation
except with the proper transfer or redemption of the
draft from the account. In order to protect the
transferee against loss of the draft back to the
transferor, the draft title monitoring means may request
at block ~l that the transferee enter a new confidential
draft identification code, which will be recorded in the
system even though the identity of the transferee is not
known. The transaction is then confirmed at block 82
and processing ends at block 8~. In addition, block 82
may include an earnings transfer means that will mark
1 322055
-32-
the transferor's account file to transfer earnings of
the corresponding first media investment, in part or in
full, to investor B, the issuer, or financial
institution, for a preselected time period or until the
~ 5 transferred draft is redeemed or returned to an account
holder. Thus, investor B might continue to enjoy at
least a portion of the earnings of the first media
investment even though the title to the corresponding
second media investment has been alienated from his
portfolio.
The presence of a proper account number and
investor's code at block 76 results in the system
comparing the number and code at block 86 as a safety
measure to assure that the draft is not transferred to
an incorrect account. An error results in the system's
increasing an error counter at block 90, checking for
new flags at block 92, and if none are found, requesting
re-entry of the transferee's data at block 94. However,
if a new flag is raised at block 92, the transaction is
rejected by the system and a report of the transaction
is printed to the financial institution at block 96 so
that the attempted transaction may be reviewed to
determine whether it involves improper activity on the
part of the transferor. After printing the report, the
system terminates processinq at block 98. Proper
correspondence beteen the account number and code at
block 86 results in a message being qenerated at block
100 that the transaction has been accepted, after which
the system organizes the entered data and the data from
the account files at block 102 to create buy and sell
orders for the draft. ~hese orders are sent to block 12
of Figure 1. Therefore, the properly entered
transaction results in a sell order for the draft from
investor B's account and a buy order for the draft to
investor A's account. Each order is separately handled
1 322055
-33-
by processing block 14.
Example 3. Following the telephonic transfer
described in Example 2, the buy order generated at block
102 for investor _'s account is received at block 12,
Figure 1, in a data field format containing investor A's
account number, a transaction code indicating a buy
order, an investment amount equal to the $500.00 face
denomination of the draft, a payment media code
indicating payment by draft, and no entry for the
investment identification. As previously described, at
block 12 the system determines that the transaction does
not relate to flags, and at block 14 the system
subsequently determines that the transaction code is for
a buy order. Then, at block 16, it is determined that
payment is by draft, and accordingly the system branches
to block 110, where the draft transfer means follows a
routine for transferring draft title into an investor
account. At block 110, the system requests the draft
identification number, which is supplied from the
recorded information made by remote entry in Example 2.
The draft is reviewed at block 112 to again determine
that it is negotiable according to the data base files,
with a finding of non-negotiability causing the system
to print a report to the account file at block 114 and
to terminate processing at block 116. ~owever, with a
- finding that the draft is negotiable, the sytem advances
from block 112 to block 118, where the draft is approved
for entry onto the account file of investor A and the
draft is assigned a new confidential code, such as 0101.
Thereafter, the system branches to a qualified
first media investment generating means, which at blocX
120 reviews the transaction instructions for the
presence and identity of a first media instruction.
Finding no instruction, or in the alternative finding an
instruction to buy a non-qualified first media
1 322055
-34-
investment, the qualified first media investment
generatin~ means branches to block 122 and reads
investor A's account file instruction for purchase of
qualified first media investments, finding that purchase
of the money market fund is specified. The system then
generates an authorization at block 124 for the purchase
- of the money market fund in an amount equal to the face
value of the transferred draft.
If at block 120 the system had determined that
the transaction request included a named investment for
purchase and that such investment was listed in the data
base file of qualified investments, the system would
have branched to block 126, where the variable QBUY is
set equal in value to the product of the amount of the
purchase, IV, times the percentage of qualification for
the investment, Q~. Thus, QBUY is set equal to the
monetary value of the qualified portion of the requested
first media investment. The system then would advance
to block 12a, where the value of QBUY is compared to the
sum of the carried over draft buy balance variable, DBB,
plus the value of the investment, IV. If the sum of DBB
plus IV is less than or equal to QBUY, the system will
proceed to follow the instruction to buy the requested
investment, first advancing to block 130 to readjust the
value of DBB equal to its prior value reduced by IV and
increased by QBUY, and then authorizing the purchase of
the named investment at block 124. At block 128, had
the value of QBUY been less than the sum of DBB plus IV,
the system would have branched to block 122 instead of
block 130 and would have followed file instructions for
the purchase as previously described.
After the qualified first media purchase has
been authorized at block 124, the`system determines from
the input data whéther the account holder has special
status at block 132. This determination may be made
1 322055
-35-
from recognition of the account number or from an entry
in the account file and is relevant to the treatment of
certain institutions who cooperate with the system to
redeem drafts. Investor A is not such a special status
account holder, so the system advances to block 134,
where limited term flags are placed on the newly entered
draft and on the newly purchased investment, indicating
that the draft in non-negotiable for several days, and
an earnings transfer means records in the investor
account file that the earnings of the investment for the
several day period will be transferred to a specified
account of institution _, as previously described. The
term for earnings transfer may differ from the term
under the earnings transfer means of blocX 34 in
recognition that original drafts were not required to be
issued in the present transaction, and accordingly, the
earnings transfer may be to a different account in which
issuer I has a different interest. From block 134, or
if the account is under special status from block 132,
the system advances to block 36 to update the account
file and to block 38 to terminate processing of the
transaction.
Example 4. Following the telephonic transfer
described in Example 2, the sell order generated for
inve~tor B's account at block 102 is received at block
12, Figure 1, in a format indicating the sale of a draft
with $500.00 face denomination. Accordingly, block 12
determines that the transaction code does not relate to
flags and processing advances to block 14, where the
transaction generating means recognizes a sale, which
will be processed by the sales transaction processing
means of Figure 3. Processing branches to block 140 of
Figure 3, where the media identification data field of
the transaction is recognized to indicate a draft, or
second media. Accordingly, the system follows a draft
1 322055
-36-
liquidation means starting with block 142, where the
identification number and confidential code of the draft
is requested and obtained from prior input data, after
which the draft file is checked at block 144 for flags.
05 If a fla~ is found, a report of the aborted transaction
is made at block 146 and processin~ terminates at block
1~8.
If no flag is found, processing advances from
block 144 to block 150, where the qualified first media
investment identification means examines the transaction
data for the identity of a specified first media
investment to be sold. None i5 specified by the
telephone transfer transaction, so file instructions for
sale are read at block 152 and the indicated investment
is checked for flags against sale at block 154. Had a
first media investment been identified at block 150, the
system would have checked for flags on liquidation at
block 156, returning to block 152 if any flags had been
found, and if no flag was found, advancing to block 158
to ensure that variable IV, the value of the first media
investment, was equal or greater than the value of DT,
the total value of drafts being sold from the account.
Once again, the system would return to block 152 if the
investment had inadequate unflagged value.
From block 158 if the value of variable IV is
adequate, or from block 154 if file instructions are
followed, the system generates the requested sale orders
for both the first and second media investment at block
160 and updates the aacount file at block 16~ be~ore
terminating proaessing at block 164. If at block 154,
the investment specified in the file ~or liquidation had
been flagged, the system would have branched to block
166 to file a report to institution ~ and terminated
processing at block 164.
~ Investor A wishes to withdraw
1 322055
-37-
$10,000.00 from his money market fund with institution F
and for this purpose uses a withdrawal request from the
investment account. Institution F receives the request
unaccompanied by any drafts, and a transaction is
05 entered at Fi~ure 1, block 10, for the sale of
$10,000.00 of the fund. Processing advances through
block 12 to block 14, where the transaction generating
means recognizes the code to be for a sale. Processing
continues to block 1~0, Figure 3, where the first and
second media differentiating means recognizes that the
media code calls for a first media sale. Next, at block
170, Figure 3A, the qualified investment identification
means determines from the account file whether the
investment to be sold is qualified, determinin~ in this
instance that the investment is qualified. If the
investment had not been qualified, a sell order would
have been generated at block 172, after which the
account file would be updated at block 174 and
processing would terminate at block 176.
With the recognition of a qualified investment
at block 17~, the account file is checked for flags
against the investment at block 178, with any flags
leading to rejection of the transaction and a report
being printed to institution F at block lR0, followed by
termination of the transaction at block 182. If no
flags are found, the qualified investment identification
means determines the qualified value of the investment
to be sold by setting a variable QSELL equal to the
total value of the investment to be sold, IV, times the
3~ percent of qualification, Q%, taken from the account
file, at block 184. Then, at block 18~, the second
media investment generating means requests input of
draft numbers into variable list DLIST, representing the
drafts, if any, that have been preselected and turned in
to institution F for cancellation in connection with the
t 322055
-3~-
first media sale.
At block 188, the total value of such drafts,
DT, is compared with zero in order to determine whether
any such drafts are present. In this instance, no such
05 drafts are present and DT equals zero. Consequently,
DLIST is set to zero at block 190 and a variable DSELL,
representing the required value of drafts to be
cancelled, is set equal to the difference between QSELL
minus DBB, the carried over draft buy balance, at block
192. Thereafter, at block 194, variable list DLIST is
increased from the available drafts in investor A's
- account until the total value DT of DLIST is equal to or
qreater than DSELL. The proper maqnitude of DT is
confirmed at block 196, with any inadequacy causing the
system to loop back to block 194.
If at block 188 the variable DT had been
greater than zero, indicating that the variable D~IST
contained at least one draft, processing would have
branched to block 198, where the value of DT is compared
to the difference between QSELL and DBB, determining
whether DLIST contains a sufficient value of drafts to
cover the qualified first media sale. If the value is
insufficient, processing bypasses block 190 to block 192
to add sufficient drafts to DLIST. If the value of DT
is sufficient, processing bypasses blocks 190-196.
From either block 196 or block 198, the system
places negotiability flags on the drafts of DLIST at
block 200, indicating that such drafts have been
cancelled. The value of the draft buy balance, DB~, is
then reset at block 202 to its last determined value
plus DT and minus QSELL. Disposition of $10, ooo.on
worth of the first media money market fund is then
authorized at block 204 and the account file is flagged
at block 206 to indicate that the proceeds of sale
hould be held by institution F until the cancelled
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drafts are turned in. Processing of the sale is
completed at blocks 17~ and 176.
Example 6. Investor A sends in the listed
drafts of DLIST from Example 5 in order to receive the
cash proceeds of the $10,000.00 liquidation from the
money market fund. Institution F enters a transaction
at block 10, Figure 1, with data fields showing account
number 123456789, a transaction code for flags, and
follow-up information that flags are to be lifted, with
each turned-in draft being listed as the identified
investment. The system recognizes at block 12 that the
transaction relates to the setting or lifting of flags
and advances to block 210, where the indicated
instruction is carried out with respect to the specified
flag. Processing terminates at block 212.
Thus, as illustrated in the above examples,
the processing system for bi-media investments performs
a variety of functions that enable an investor to have
expanded utility of his investment account.
Transactions can be entered by a variety of entry means,
including computer terminals and remotely located
telephone keypads. The data input to the system from
the entry means is recognized by a transaction
generating means according to its content and according
to pre-established data fields, and the system responds
accordingly to generate buy or sell transactions.
Importantly, a differentiating means distinguishes
between first and second media investments in both buy
and sell situations in order to ensure that proper
balance is maintained between investments having bi-
media representation. Specifically, a qualified
investment identification means serves in both buy and
sell situations to alert the system to the presence of a
transaction involving a qualified investment. Then, a
second media investment generating means identifies
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. ~
appropriate quantities and identities of second media
investments to be bought or sold to ensure that a proper
balance of first and second media investments is
maintained.
05 Further enhancements include the system's
ability to transfer earnings of a first media investment
to an account other than the account containing the
related second media investment. An earnings transfer
indicating means permits an investor to retain benefits
of his investments even when he has parted with the
related second media investment. Alternatively,
earnings may be transferred to other accounts, such as
to pay for costs of the system.
Title to the second media drafts is carefully
controlled and protected to prevent mistake, theft,
seizure, or other loss by the proper account holder,
with due regard for the further safety of the draft in
the hands of a subsequent holder. Negotiability
indicating means permits ready determination of whether
any second media draft has proper status to be
transferred. A draft transfer means provides a
protective routine for transferring draft title either
between accounts in the system or to a non-holder of an
account~ When a draft is being transferred to a non-
holder of an account, a first and second media titlealienation means permits the holder of the related first
media investment or other account holder in the system
to continue to benefit fronl that investment. At the
same timé, a draft title monitoring means gives the non~
holder of an account the opportunity to protect his
ownership of a draft by providing an ownership code that
will be retained with the draft's identification within
the system. When a draft is transferred between
accounts within the system, the draft transfer means
also provides a new confidential code to the new holder,
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but, in this instance, the draft also is received in the
account of a known holder for further security. In
addition, when a draft is received in an account in the
system, the media differentiating means activates a
means for generating a qualified first media investment,
thus ensuring bi-media representation of investments
even when the initial inventment is in the second media.
As noted, the media differentiating means also
distinguishes between first and second media
representations for purposes of selling or transferring
investments out of an account in the system. Sales of
first media investments are processed by the qualified
investment identification means to determine the degree
of qualification, and the second media investment
generating means then ensures that the necessary
corresponding quantity of second media drafts are
eliminated from the same account. When drafts are
liquidated from an account, the qualified first media
investment generating means then serves the additional
function of liquidating sufficient qualified first media
investment to maintain the necessary balance between the
bi-media representation of investments in each account.
The foregoing is considered as illustrative
only of the principles of the invention. Further, since
numerous modifications and changes will readily occur to
those skilled in the art, it is not desired to limit the
invention to the exact structure and operati~n shown and
described, and accordingly all suitable modifications
and equivalents may be regarded as falling within the
scope of the invention as defined by the claims that
follow.
35
