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commodities. At trial, petitioner was unable to provide signed
copies of these documents and testified that he did not recall
signing either of the documents.
The $35,000 management fee incurred by petitioner on
December 1, 1980 (see above), was for FAX's services. Short
testified that he never investigated FAX because he felt that FAX
was just part of Hunter and that the $35,000 fee was just being
paid to Hunter.
Through Hunter, petitioner established two spreads on
December 1, 1980. The first was a simple bear spread consisting
of a long position of 30 contracts of October 1981 100-ounce gold
at a price of $723.80 per ounce and a matching short position of
30 contracts of February 1982 gold at $762. The second position
was an imperfect butterfly spread. The first wing consisted of
70 contracts of April 1982 gold bought at $785.10. The body was
145 short June 1982 gold, of which 70 contracts were sold at
$804.50 on COMEX and 75 contracts at $803.50 on IMM. The second
wing was comprised of 75 contracts of September 1982 gold bought
on IMM at $834. The slight imperfection in the butterfly
occurred because there were only 2 months between the first wing
and the body, whereas there were 3 months between the second wing
and the body; and because the June/September part of the spread
consisted of 75 contracts, whereas the April/June part consisted
of 70 contracts.
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