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On March 31, 1987, Charles R. Schwab, through CL Acquisition
Corp. (currently known as The Charles Schwab Corp.), purchased
from BankAmerica the stock of The Charles Schwab Corp. (formerly
BBC and currently known as Schwab Holdings, Inc.), and its wholly
owned subsidiary, Schwab & Co., in a management-led leveraged
buyout.
Commission Income Issue
One of petitioner's primary sources of revenue is commission
income, which is earned by effecting sales and purchases of
stocks and other securities for its customers in a rapid,
efficient, and cost effective manner.
The primary service performed by petitioner in effecting
sales and purchases of stocks and securities on behalf of
customers is the execution of trade orders. Petitioner does not
engage in many of the other activities in which full-commission,
full-service brokerage firms engage, such as underwriting,
market-making, arbitrage, research, and portfolio management.
Petitioner also does not solicit transactions in any particular
security and does not offer investment advice to its customers
about the nature, potential value, or suitability of any
particular security. Nor does petitioner exercise any
discretionary authority over customer accounts or, with certain
limited exceptions, engage in principal transactions in any
security.
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Last modified: May 25, 2011