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clients. LTD engaged in four types of dollar transactions.
i. LTD arranged sales of dollars to a client in exchange
for pesos. The client contacted a promoter in Mexico, who quoted
an exchange rate for pesos to dollars. Once the client and the
promoter agreed on a rate, the promoter performed the exchange
operation from his office in Mexico. The client made pesos
available in Mexico to be exchanged, and the promoter documented
receipt of the pesos. The promoter then converted the pesos to
dollars at a Government-authorized Mexican exchange house. Once
the exchange was executed, the promoter directed that the dollars
be wired to San Antonio to be credited to the client's account.
The transaction appeared as a credit on the client's monthly
statement. LTD's income derived from the difference between the
exchange rate obtained from the Mexican exchange house and the
rate quoted to and agreed to by the client.
ii. LTD sold dollars from its own account to a client in
exchange for pesos. LTD transferred money, usually by wire, from
its Frost Bank Money Market account to the client's designated
financial institution. The transaction appeared as a debit from
LTD's Frost Bank account.
iii. LTD arranged purchases of dollars from a client in
exchange for pesos. The client withdrew dollars from an LTD
account to exchange with pesos obtained by LTD. The transaction
appeared as a debit on the client's monthly statement.
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