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B&C, a commodities clearing firm that he formed in partnership
with three former coworkers. Petitioner was B&C's managing
partner, and he initially owned 54 percent of its equity. B&C
traded commodity futures for its own account and for the accounts
of its customers, and it cleared trades for customers with
accounts which it managed on a nondiscretionary basis
(nondiscretionary accounts).9 B&C was a member of the CBT and
the Board of Trade Clearing Corporation. B&C was registered with
the CFTC as an FCM.
At the end of 1982, petitioner purchased his partners'
interests in B&C, and he installed his three children as partners
as of January 1, 1983. As relevant herein, petitioner owned 95.5
percent of B&C, and each of his children owned 1.5 percent. B&C
traded Treasury securities in both the cash and futures markets
for customer accounts and for its own accounts, and it had
established trading relationships and credit lines with a number
of primary and secondary dealers. B&C facilitated retail
customers' submittal of noncompetitive bids in Treasury auctions
by forwarding their bids to a primary dealer named Harris Bank &
Trust. B&C acted on behalf of the retail customers in reselling
the securities purchased at auction at the highest available
8(...continued)
business in the futures market.
9 Alternatively, an account could be managed on a
discretionary basis. In the case of discretionary accounts,
customers give their broker a set amount of money to manage in
the manner which the broker believes is wise.
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