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screens and executed blind trades with counterparties who were
either primary dealers or other market participants. Petitioner
could not place orders to buy or sell securities on any other
interdealer broker screen because those screens were restricted
for use by primary dealers only. CF gave petitioner the same
favorable commission rate extended to primary dealers on account
of the volume of his trading. The advantageous commission rate
offered to petitioner, based on volume, was generally available
to all CF customers.
Petitioner worked an average of 12 hours per day, spending
60-80 percent of his time trading in Account 2900. His trading
assistant, a B&C employee named Cindy James, verbally confirmed
all of his Account 2900 trades with his counterparties on the day
of the trade, and, during the next day, she verified principal
and accrued interest and prepared the necessary cash and security
delivery instructions. Although it was customary for dealers to
send their customers confirmation, petitioner did not send
confirmation to his counterparties.
Petitioner traded the following dollar volumes in the
Treasury securities cash market during 1985 through 1989:
COUNTERPARTY 1985 1986 1987 1988 1989
Aubrey Lanston -0- -0- -0- -0- $50,000,000
Barclays Bank -0- -0- -0- -0- 150,000,000
CF1 $6,668,145,000 $15,757,000,000 $1,427,000,000 $1,828,000,000 9,547,000,000
Chemical Bank -0- -0- 50,000,000 55,000,000 200,000,000
Chicago Research & Trading -0- 1,808,000,000 -0- -0- 535,000,000
Citibank -0- -0- 294,000,000 -0- 4,348,000,000
Continental Bank -0- -0- -0- -0- 636,000,000
Daiwa -0- 150,000,000 -0- -0- 139,000,000
Discount Corp. 50,000,000 1,415,000,000 200,000,000 70,000,000 485,000,000
Drexel Burnham 1,872,600,000 4,348,000,000 934,500,000 -0- 550,000,000
Fidelity -0- -0- -0- -0- 200,000,000
First Boston 3,686,550,000 3,298,000,000 105,000,000 -0- 150,000,000
First Interstate 2,330,000,000 2,712,800,000 400,000,000 -0- -0-
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