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Electronic Selling and Clearing of SSFC

Electronic Selling and Clearing of SSFC

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Published by Chris Ryan

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Published by: Chris Ryan on Mar 28, 2011
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Method of Selling Single Stock Futures Contractsand OnlineFacilitating Delivery and Donation Onlinevia a Nonprofit Organization
United States Patent Application61/428178 Julie ButlerWilliam BreckChris RyanDecember 26, 2010
ABSTRACT
Single Stock Futures Contracts (SSFC) is a hybrid financial instrument, which became effective on November 2,2002, created under the Commodity Modernization Act of 2000 (CMA). They are futures contracts with theunderlying asset being one particular stock. When purchased, no transmission of share rights or dividends occurs.Being futures contracts they are traded on margin, thus offering leverage, and they are also considered an assetclass under Internal Revenue Service (IRS) Internal Revenue Code (IRC) 1234(b) for purposes of tacking todetermine holding period to recognize long term capital gains and/or fair market valuation vs. cost basis as definedunder IRC 1224(14) and IRS Publication 561.Method of selling a single stock futures contract online via a nonprofit organization is in support of furtherance of a business objective of the for profit small business while simultaneously offering advantages to the nonprofitcharitable organization. It is a mechanism whereby a small business gifts a certain amount of shares of its issuedcommon/preferred stock capital to a nonprofit and simultaneously the nonprofit issues SSFCs against the donatedcommon/preferred stock capital to previous/prospective donors/investors via an online ecommerce clearingmechanism.The ability of a nonprofit to offer the SSFCs contracts online in the absence of a registration statement lies in thespecific exemption for the securities of 
IRC §501(c)(3)
non-profit organizations - under
§3(a)(4)
of the
SecuritiesAct
(as amended through October 13, 2009):(4) Any security issued by a person organized and operated exclusively for religious, educational, benevolent,fraternal, charitable, or reformatory purposes and not for pecuniary profit, and no part of the net earnings of which inures to the benefit of any person, private stockholder, or individual; or any security of a fund that isexcluded from the definition of a Securities that is excluded from the definition of an investment companyunder section 3(c)(10)(B) of the Investment Company Act of 1940;
§3(e)
of the
Exchange Act of 1934
provides:(e) Charitable organizations  (1) Exemption  Notwithstanding any other provision of this chapter, butsubject to paragraph (2) of this subsection, a charitable organization, as defined in section 3(c)(10)(D) of theInvestment Company Act of 1940 [
15 U.S.C. 80a-3(c)(10)(D)
], or any trustee, director, officer, employee, orvolunteer of such a charitable organization acting within the scope of such person's employment or dutieswith such organization, shall not be deemed to be a "broker", "dealer", "municipal securities broker","municipal securities dealer", "government securities broker", or "government securities dealer" for purposesof this chapter solely because such organization or person buys, holds, sells, or trades in securities for its ownaccount in its capacity as trustee or administrator of, or otherwise on behalf of or for the account of  (A) sucha charitable organization; (B) a fund that is excluded from the definition of an investment company undersection 3(c)(10)(B) of the Investment Company Act of 1940 [
15 U.S.C. 80a-3(c)(10)(B)
]; or (C) a trust or otherdonative instrument described in section 3(c)(10)(B) of the Investment Company Act of 1940 [
15 U.S.C. 80a-3(c)(10)(B)
], or the settlors (or potential settlors) or beneficiaries of any such trust or other instrument.(2) Limitation on compensation  The exemption provided under paragraph (1) shall not be available to anycharitable organization, or any trustee, director, officer, employee, or volunteer of such a charitableorganization, unless each person who, on or after 90 days after December 8, 1995, solicits donations on behalf 
 
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of such charitable organization from any donor to a fund that is excluded from the definition of an investmentcompany under section 3(c)(10)(B) of the Investment Company Act of 1940 [
15 U.S.C. 80a-3(c)(10)(B)
], iseither a volunteer or is engaged in the overall fund raising activities of a charitable organization and receivesno commission or other special compensation based on the number or the value of donations collected for thefund.
§3(a)(10)(B)
and
(D)
of the
Investment Company Act of 1940
provide:(B) For the purposes of subparagraph (A)(ii), a fund is described in this subparagraph if such fund is a pooledincome fund, collective trust fund, collective investment fund, or similar fund maintained by a charitableorganization exclusively for the collective investment and reinvestment of one or more of the following: (i)assets of the general endowment fund or other funds of one or more charitable organizations; (ii) assets of apooled income fund; (iii) assets contributed to a charitable organization in exchange for the issuance of charitable gift annuities; (iv) assets of a charitable remainder trust or of any other trust, the remainderinterests of which are irrevocably dedicated to any charitable organization; (v) assets of a charitable leadtrust; (vi) assets of a trust, the remainder interests of which are revocably dedicated to or for the benefit of 1or more charitable organizations, if the ability to revoke the dedication is limited to circumstances involving(I) an adverse change in the financial circumstances of a settlor or an income beneficiary of the trust; (II) achange in the identity of the charitable organization or organizations having the remainder interest, providedthat the new beneficiary is also a charitable organization; or (III) both the changes described in subclauses (I)and (II); (vii) assets of a trust not described in clauses (i) through (v), the remainder interests of which arerevocably dedicated to a charitable organization, subject to subparagraph (C); or (viii) such assets as theCommission may prescribe by rule, regulation, or order in accordance with section 80a6(c) of this title.(D) For purposes of this paragraph  (i) a trust or fund is maintained by a charitable organization if theorganization serves as a trustee or administrator of the trust or fund or has the power toremove the trusteesor administrators of the trust or fund and to designate new trustees or administrators; (ii) the term pooledincome fund has the same meaning as in section 642(c)(5) of title 26; (iii) the term charitable organizationmeans an organization described in paragraphs (1) through (5) of section 170(c) or section 501(c)(3) of title 26;(iv) the term charitable lead trust means a trust described in section 170(f)(2)(B), 2055(e)(2)(B), or2522(c)(2)(B) of title 26; (v) the term charitable remainder trust means a charitable remainder annuity trustor a charitable remainder unitrust, as those terms are defined in section 664(d) of title 26; and (vi) the termcharitable gift annuity means an annuity issued by a charitable organization that is described in section501(m)(5) of title 26.The brief summary of benefits includes:
1.
 
Ability of a Nonprofit (a registered 501(c)(3)) to legally sell via electronic commerce, single stock futurecontracts (SSFC) of donated shares (common/preferred stock capital) of private/public registeredcompanies the Nonprofit receives.
2
.
 
Small businesses having the ability of distributing potential future ownership in their venture to a widearray of potential investors in absence of a registration statement filed with the Securities and ExchangeCommission.
CLAIMS1.
 
A method of selling single stock futures contracts via electronic commerce.
2
.
 
A method of selling single stock futures contracts via mass market commerce.
3.
 
A method of selling single stock futures contracts via nonprofit organization.
4.
 
A method of selling single stock futures contracts through a nonprofit organization via electroniccommerce.
5.
 
A method of selling single stock futures contracts through a nonprofit organization via mass marketcommerce.
 
 
3
 
6
.
 
A method of selling single stock futures contracts via electronic commerce, exempt from registration withthe Securities and Exchange Commission (SEC).
7
.
 
A method of selling single stock futures contracts via electronic commerce, exempt from registration withthe Commodity Futures Trading Commission (CFTC).
8.
 
A method of distributing future share ownership of privately held corporations via mass marketcommerce, exempt from registration with the Securities and Exchange Commission (SEC).
9.
 
A method of distributing future share ownership of privately held corporations via mass marketcommerce, exempt from registration with the Commodity Futures Trading(CFTC).
9.
10.
 
A method of leveraging social networks and social network activity in financing equity basedfinancing.
11.
 
A method of distributing future share ownership via social networks of privately held corporations viamass market commerce, exempt from registration with the Securities and Exchange Commission (SEC).
1
2
.
 
A method of distributing future share ownership via social networks of privately held corporations viamass market commerce, exempt from registration with the Commodity Futures Trading Commission(CFTC).
13.
 
A method of distributing future share ownership via internet news portals of privately held corporationsvia mass market commerce, exempt from registration with the Securities and Exchange Commission (SEC).
14.
 
A method of selling single stock futures contracts via electronic commerce, exempt from registration withthe Commodity Futures Trading Commission (CFTC).
15.
 
A method of distributing future share ownership of privately held corporations via electronic commerce,exempt from registration with the Securities and Exchange Commission (SEC).
1
6
.
 
A method of distributing future share ownership of privately held corporations via electronic commerce,exempt from registration with the Commodity Futures Trading.
1
7
.
 
A method of distributing future share ownership via social networks of privately held corporations viaelectronic commerce, exempt from registration with the Securities and Exchange Commission (SEC).
18.
 
A method of distributing future share ownership via social networks of privately held corporations viaelectronic commerce, exempt from registration with the Commodity Futures Trading Commission (CFTC).
19.
 
A method of distributing future share ownership via internet news portals of privately held corporationsvia electronic commerce, exempt from registration with the Securities and Exchange Commission (SEC).
2
0.
 
A method of distributing future share ownership via internet sales portals of privately held corporationsvia electronic commerce, exempt from registration with the Commodity Futures Trading Commission(CFTC).
2
1.
 
A method of segregating donated assets in a separate escrow account.
22
.
 
A method of breaking up donated assets into identifiable units.
2
3.
 
A method of producing futures contracts against identifiable units.
2
4.
 
A method of producing an electronic receipt for purchase of SSFC.
2
5.
 
A method of producing an electronic receipt acknowledging purchasers agreement and understanding touniform futures disclosure form.
26
.
 
A method of producing an electronic receipt informing purchaser of SSFC their right to rescind purchase.
27
.
 
A method of producing an electronic communication to purchaser of SSFC around delivery date of same.
2
8.
 
A method of producing an electronic communication to purchaser of SSFC of the Valuation of same
 
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