- 135 -
efforts to do so. Final arrangements for the purchase of Long
Bonds and Euro Notes in the marketplace were similarly delayed.
In late October 1989, Pohlschroeder drafted standing orders
which, on their face, purport to instruct Merrill not to make any
purchases until the partnership had acquired the Citicorp Notes.
Within 1 week after acquisition of the Citicorp Notes, the amount
of cash that would be needed for purchases of the Colgate debt
and the time it would be needed were definite enough that Merrill
could press BOT and BFCE to conclude arrangements concerning the
sale of the Citicorp Notes. The investment in the Citicorp Notes
was not made to accommodate the timing of the acquisition of
Colgate debt; rather, it was the reverse: The acquisition of the
Colgate debt was timed so as to accommodate the requirements of
the section 453 investment strategy.
If the timing of ACM's acquisition of Colgate debt was
largely within the principals' control, and they were confident
that negotiations could be concluded and sales closed within a
short time, what the partnership needed for its temporary cash
balances was a portfolio of short-term highly liquid investments.
That need was not served by the decision to acquire an
undiversified portfolio consisting of Citicorp's unregistered
5-year notes. Nor can that need explain the decision to
liquidate the portfolio by means of a complex structured
Page: Previous 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 NextLast modified: May 25, 2011