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the Peoria office arranged financing for petitioner's Treasury
securities trades.
Petitioner's personal trading was transacted through B&C's
House Account 2900 (Account 2900). B&C maintained this account
as a "partner's account", and the securities purchased and sold
in Account 2900 were petitioner's property. Petitioner did not
share with his partners the gains and losses from trading these
securities, and he made his own trading decisions in trading in
this account. The typical holding period for the Treasury
securities held in Account 2900 was less than 1 month.
Petitioner's trading records were maintained primarily in
the Peoria office by B&C employees; B&C's records were maintained
in the Chicago office. B&C employees in Peoria forwarded
clearing instructions to the Chicago office for all of
petitioner's Account 2900 trades, and B&C employees in the
Chicago office cleared all these trades and made appropriate
entries in B&C's records.
The Government Securities Act of 1986 (the 1986 Act),
Pub. L. 99-571, sec. 102(e) and (f), 100 Stat. 3218, 15 U.S.C.
sec. 78o, became effective in July 1987. Before that time, most
dealers in Treasury securities were not required to register with
the Securities and Exchange Commission (SEC) or the NASD. The
1986 Act required Government securities brokers and dealers to
register with the SEC and the NASD unless an exemption applied.
Initially, there was uncertainty as to whether the 1986 Act
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