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government (foreign or domestic) financial
instruments and futures contracts and options
with respect to the foregoing, and in
connection therewith to use arbitrage,
spreading, margin and other leveraging
devices, and such other techniques deemed
appropriate.
Petitioner contributed $300,000 to Tandrill in exchange for a
93.75-percent partnership interest; Mr. Illingworth contributed
$20,000 in exchange for a 6.25-percent interest.
On the same date Tandrill was formed (August 22, 1979),
Tandrill entered into a Management Agreement with Manhattan Metals,
whereby it was agreed that Manhattan Metals would “manage, buy,
sell, sell short, redeem and otherwise invest, reinvest and trade
in commodities of every nature” on Tandrill’s behalf. The
Management Agreement authorized Manhattan Metals to: (1) Perform
administrative functions for Tandrill; (2) employ Wilcap Advisors
(Wilcap)6 as an adviser in its trading activities; and (3) share in
commissions or fees that Tandrill paid.
Tandrill paid Manhattan Metals a retainer and organization fee
of $10,000 upon execution of the Management Agreement. On an
ongoing basis, Tandrill was required to pay Manhattan Metals an
5(...continued)
National Mortgage Association that represent undivided interests
in specific pools of Government-guaranteed mortgages. Such
certificates are backed by the full faith and credit of the
Federal Government.
6 Messrs. Paul Willensky and Mark Sherman were the
principals of Wilcap. Mr. Illingworth had known Messrs. Willensky
and Sherman less than a year, and had not previously dealt with
them, when he decided to use their company as an adviser to
Manhattan Metals.
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