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trading activity, petitioner did not closely monitor the trades
Manhattan Metals performed for Tandrill.
Tandrill's net asset value decreased each calendar quarter
during 1980.
Tandrill's Transactions
Arbitrage Management Investment Company (Arbitrage
Management)7 and Pershing & Co. (Pershing) performed brokerage
services for Tandrill with respect to Treasury bill options
transactions; they also made the market in which such transactions
were executed. Arbitrage Management or Pershing was on the "other
side" of each Treasury bill option transaction that Tandrill
entered. A.C.L.I. International Commodity Services, Inc. (ACLI),
and Bache Halsey Stuart Shields, Inc. (Bache), performed brokerage
services for Tandrill with respect to its commodity futures trading
transactions.
a. Options Transactions
The Treasury bill options transactions involved herein were
cleared through Pershing and Arbitrage Management.8 See appendices
A-D for a list of Tandrill’s put-option positions. Messrs.
Willensky and Sherman of Wilcap handled the trades on behalf of
Manhattan Metals. They made all the trading decisions with respect
7 Arbitrage Management Investment Company has been
involved in other cases in this Court. See, e.g., Fox v.
Commissioner, 82 T.C. 1001 (1984); Manko v. Commissioner, T.C.
Memo. 1995-10.
8 Pershing and Arbitrage Management "wrote" the options
comprising the spreads that Tandrill established.
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