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way" and functioning as a dealer because (i) he was deriving
profit from the spread, as dealers do; and (ii) he was performing
a merchandising function by causing transactions to occur that
might otherwise not, as dealers do.
However novel petitioner's strategy for dealing in
securities may have been, we do not believe he has taken himself
outside Congress's clearly expressed intention in the 1934 Act to
make it "impossible to contend that a stock speculator trading on
his own account is not subject to the [capital loss limitation]
provisions" of the predecessor of section 1211. H. Conf. Rept.
1385, 73d Cong., 2d Sess., at 22 (1934), 1939-1 C.B. (Part 2)
627, 632. Regardless of the extent to which petitioner's
strategy may have captured the spread, or facilitated market
transactions, he has still failed to show he had customers. One
could imagine any number of trading strategies designed to profit
from the spread between bid and asked prices, or that might
enhance market liquidity, but use of them would not confer dealer
status on one trading for his own account. In conducting his
research, and attempting to place bid and ask orders that would
become the best price on an exchange, petitioner was functioning
like the "trader" described in Kemon "whose status as to the
source of supply is not significantly different from that of
those to whom [he sells]." Kemon v. Commissioner, supra at 1033.
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