Gary K. Bielfeldt and Carlotta J. Bielfeldt - Page 13

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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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