# US 8,543,486 B2 · Method and system for the protection of broker and investor relationships, accounts and transactions

> Agents: this data is available as JSON from the patentgrep API and MCP server — see https://patentgrep.com/llms.txt

- Number: US 8,543,486 B2
- Document ID: US8543486B2
- Status: Granted
- Kind: B2
- Application number: 12/882,883
- Filed: 2010-09-15
- Published: 2011-06-16
- Granted: 2013-09-24
- Earliest claimed: 2003-03-07
- Assignees: Mantas, Inc.
- Applicants: Steven Kirk Donoho; Patrick Kiplinger Hyde; Nimish Sheth; Anil Sesha Kumar Venuturupalli
- Inventors: Steven Kirk Donoho; Patrick Kiplinger Hyde; Nimish Sheth; Anil Sesha Kumar Venuturupalli
- Web page: https://patentgrep.com/patent/US8543486B2

## CPC

- G06Q 40/06: Asset management; Financial planning or analysis
- G06Q 40/00: Finance; Insurance; Tax strategies; Processing of corporate or income taxes
- G06Q 40/04: Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
- G06Q: INFORMATION AND COMMUNICATION TECHNOLOGY [ICT] SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES; SYSTEMS OR METHODS SPECIALLY ADAPTED FOR ADMINISTRATIVE, COMMERCIAL, FINANCIAL, MANAGERIAL OR SUPERVISORY PURPOSES, NOT OTHERWISE PROVIDED FOR

## Abstract

A computer based method and system for advanced scenario based alert generation and processing is presented, with the specific ability to broker and investor activities that put either at risk. Advanced scenarios that describe such broker and investor activities are specifically defined. By applying these scenarios to transactional data from a variety of financial institutions, broker and investor activities causing unacceptable amounts of risk can be detected on an automated basis.

## Claims

### Claim 1

A computer-based method for identifying a situation representing risk to a brokerage or its investors, comprising:
receiving, at a computer system, representative of:
a plurality of transactions relating to securities trading, and
a plurality of entities involved in securities trading, wherein the plurality of transactions and the plurality of entities are not predetermined to be related;
identifying, by the computer system, a behavior of interest comprising one or more sequence detection requirements that is indicative of a risk to a brokerage or its investors by identifying rapid switching of a first mutual fund or a second mutual fund, wherein one or more of the plurality of transactions is a solicited transaction involving one or more customers of a securities brokerage and one or more securities representatives;
determining, by the computer system, whether one or more groups of the transactions and entities collectively satisfy at least one of the one or more of the sequence detection requirements; and
in response to one or more groups of the transactions and entities collectively satisfying at least one of the one or more sequence detection requirements, generating, by the computer system, an alert informing a user of the one or more groups of the transactions and entities.

### Claim 2 (depends on 1)

The method of claim 1, wherein the determining whether one or more groups of the transactions and entities collectively satisfy at least one of the one or more sequence detection requirements comprises performing one or more of the following on the plurality of transactions and the plurality of entities:
sequence matching to identify sequences in one or more transactions and to relate the identified sequences to one or more of the entities in the received data;
link analysis to establish connections between one or more transactions and entities in the received data;
rule-based analysis to identify at least one of the transactions and entities based on rules specifying parameters and thresholds;
outlier detection analysis to identify at least one of the transactions and entities outside of a defined statistical range;
decision tree analysis; and
detection processing using neural networks.

### Claim 3 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more customers of a securities brokerage;
the behavior of interest comprises holding concentrated positions in a single security; and
the received data comprises market value of a concentrated position and total cash and security value.

### Claim 4 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more customers of a securities brokerage;
the behavior of interest comprises holding a concentrated position in low-priced securities; and
the received data comprises low-priced equities balance and total cash and security value.

### Claim 5 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more customers of a securities brokerage;
the behavior of interest comprises abusing auto-execution systems; and
the received data comprises information associated with a plurality of orders.

### Claim 6 (depends on 5)

The method of claim 5, further comprising generating; an alert if one or more of the following conditions are met:
each order is on a same side of a market;
a total time span between orders is less than a threshold;
a quantity of each order is less than an auto-execution threshold;
a total quantity of orders exceeds the auto-execution threshold;
a plurality of the orders originate from a same account;
a plurality of the orders originate from a plurality of accounts associated with a same household; and
the orders are entered during regular trading hours.

### Claim 7 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more customers of a securities brokerage;
the behavior of interest comprises marking the close; and
the received data comprises order time, holdings by others in a household and margin maintenance percentage.

### Claim 8 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more customers of a securities brokerage;
the behavior of interest comprises making improper short sales; and
the received data comprises securities sold by an account holder, securities held long by an account holder and securities purchased by an account holder.

### Claim 9 (depends on 1)

The method of claim 1, wherein
one or snore of the plurality of transactions involve one or more customers of a securities brokerage;
the behavior of interest comprises making cross-trades away from the market;
and the received data comprises information associated with a plurality of executions.

### Claim 10 (depends on 9)

The method of claim 9, further comprising generating an alert if a plurality of executions:
occur during extended trading hours;
involve a same security;
have a same execution price;
have a same execution date and time;
are on opposite sides of a market.

### Claim 11 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more customers of a securities brokerage;
the behavior of interest comprises encouraging orders by marking them as unsolicited; and
the received data comprises u number of unsolicited orders and a number of solicited orders.

### Claim 12 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more customers of a securities brokerage;
the behavior of interest comprises encouraging short-term holding; and
the received data comprises buy orders, sell orders and indication of solicitation.

### Claim 13 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more securities representatives;
the behavior of interest comprises soliciting, orders but marking them as unsolicited; and
the received data comprises solicitation attempts and unsolicited orders.

### Claim 14 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more securities representatives;
the behavior of interest comprises shadowing a customers account; and
then received data comprises time between trades in a security.

### Claim 15 (depends on 1)

The method of claim 1, wherein
one or more of the. plurality of transactions involve one or more brokerage order-takers or employees:
the behavior of interest comprises front-running; and
the received data comprises employee account activity and employee-linked account activity.

### Claim 16 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more brokerage employees;
the behavior of interest comprises trading on insider information; and
the received data comprises closing prices and trades in an account associated with an employee.

### Claim 17 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more brokerage employees;
the behavior of interest comprises making large deposits; and
the received data comprises employee deposit amounts and employee account net worth.

### Claim 18 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more customers of a securities brokerage and securities representatives;
the behavior of interest comprises rapid switching of one mutual fund for another mutual fund; and
the received data comprises fund purchase date, mutual fund sale date and solicitation records.

### Claim 19 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve one or more investment advisors;
the behavior of interest comprises disproportionate allocation of IPO shares; and
the received data comprises IPO initial trading price, IPO closing price and subaccount IPO allocation.

### Claim 20 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve an investment advisors;
the behavior of interest comprises unfair allocation of block trades to subaccounts of the investment advisor; and
the received data comprises block trade purchase price, block trade allocation and security price at time of allocation.

### Claim 21 (depends on 1)

The method of claim 1, wherein
one or more of the plurality of transactions involve an investment advisor;
the behavior of interest comprises maintenance of concentrated positions in a subaccount of the investment advisor; and
the received data comprises a value of individual equities within the subaccount, a value of the subaccount and a total number of subaccounts managed by the advisor.

### Claim 22 (depends on 1)

The method of claim 1, wherein one or more of the plurality of transactions is a solicited transaction involving one or more customers of a securities brokerage and one or more securities representatives.

### Claim 23 (depends on 1)

The method of claim 1, wherein the solicited transaction is solicited by the securities representative, wherein proceeds associated with the switching are at least a percentage of a value of the first mutual fund.

### Claim 24

A non-transitory computer-readable medium for identifying a situation representing risk to a brokerage or its investors having sets of instructions stored thereon which, when executed by a computer, cause the computer to:
receive representative of:
a plurality of transactions relating to securities trading, and
a plurality of entities involved in securities trading, wherein the plurality of transactions and the plurality of entities are not predetermined to be related;
identify a behavior of interest comprising one or more sequence detection requirements that is indicative of a risk to the brokerage or its investors by identifying rapid switching of a first mutual fund or a second mutual fund, wherein a solicited transaction is solicited by a securities representative;
determine whether one or more groups of the transactions and entities collectively satisfy at least one of the one or more of the sequence detection requirements; and
in response to one or more groups of the transactions and entities collectively satisfying at least one of the one or more sequence detection requirements, generate an alert informing a user of the one or more groups of the transactions and entities.

### Claim 25

A system for identifying a situation representing risk to a brokerage or its investors, the system comprising:
a storage medium; and
a processor in communication with the storage medium, wherein the storage medium includes sets of instructions stored thereon which, when executed by the processor, cause the processor to:
receive representative of:
a plurality of transactions relating to securities trading, and
a plurality of entities involved in securities trading, wherein the plurality of transactions and the plurality of entities are not predetermined to be related;
identify a behavior of interest comprising one or more sequence detection requirements that is indicative of a risk to the brokerage or its investors by identifying rapid switching of a first mutual fund or a second mutual fund, wherein proceeds associated with the switching are at least a percentage of a value of the first mutual fund;
determine whether one or more groups of the transactions and entities collectively satisfy at least one of the one or more of the sequence detection requirements; and
in response to one or more groups of the transactions and entities collectively satisfying at least one of the one or more sequence detection requirements, generate an alert informing a user of the one or more groups of the transactions and entities.