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Illingworth’s goal was to build Manhattan Metals into a commission
merchant that would compete with Merrill Lynch.
Initially, Manhattan Metals brokered relatively small
transactions in metals, including copper. Manhattan Metals then
expanded its operations to include trading in the futures markets,
primarily in copper, gold, and silver.
By 1980, Manhattan Metals had seven employees, including two
traders--Mr. Illingworth and Herbert Weiss. Mr. Weiss was the main
trader for Manhattan Metals. He was authorized to make trades
without discussing them with Mr. Illingworth. One of Mr. Weiss’
responsibilities was to evaluate the prices that were being paid by
Manhattan Metals for option spreads.
Mr. Illingworth held seats on the New York Mercantile Exchange
and the New York Futures Exchange. Mr. Weiss was a member of the
Commodities Exchange, Inc. (COMEX). Manhattan Metals was not a
member of any exchange.
In addition to Manhattan Metals, Mr. Illingworth was a partner
in several partnerships that were involved in option spreads and
commodities trading activities.
Petitioner’s Investigation of Mr. Illingworth
In considering the possibility of entering into an investment
relationship with Mr. Illingworth, petitioner engaged attorneys at
2(...continued)
then wife and a third-party investor.
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