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fluctuations in the value of the Colgate debt was
effectively minimal, and the Partnership need not
maintain its position in the instruments purchased to
hedge against such exposure.
Although there is no explicit assertion here that the partnership
believed the LIBOR Notes to be necessary so long as Kannex was
one of the principal partners, that is the implication.
Petitioner contends that Merrill and the Partnership
Committee could honestly and reasonably have represented that the
LIBOR Notes actually served as a hedge for Kannex's benefit.
Petitioner denies that Merrill and Colgate knew of Kannex's swaps
with ABN.
[E]ven though Merrill entered into swaps with ABN
relating to Kannex's share of the LIBOR notes owned by
ACM, Merrill was not specifically informed of the
Kannex/ABN swaps relating to the LIBOR notes. [Emphasis
added.]
Although Merrill may have suspected that Kannex and ABN
had entered into similar swaps, there is no evidence
that Merrill knew, in fact, that such a transaction had
taken place. Consequently, there is nothing about
Taylor's representation at the third Partnership
meeting that is inaccurate or misleading.
It is true that there is no evidence in the record that ABN
specifically apprised Merrill of its swaps with Kannex. But this
misses the point. Petitioner seems to think that Merrill's
understanding as to the utility of the LIBOR Notes would be
significantly affected by specific information or lack thereof
that ABN was engaging in a swap with Kannex that mirrored the
swap between ABN and Merrill. There was no doubt why ABN entered
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