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focused on capital preservation, typically investing in overnight
deposits, Eurodollars, commercial paper, and tax-exempt
obligations.
On September 15, 1992, Tempesta and petitioner's treasurer,
John M. Foster (Foster), met with Jacoby and Robert N. Gordon
(Gordon), president of Twenty-First, to discuss the strategies
proposed in the August 13, 1992, letter from Twenty-First. In a
meeting that lasted approximately an hour, Jacoby and Gordon
presented the DRIP strategy and the ADR transaction. Following
the meeting, Tempesta and Foster discussed the transactions with
Darryl White (White), petitioner's chief financial officer. They
decided not to engage in the DRIP investment but chose to go
forward with the ADR transaction, relying primarily on Tempesta's
recommendation. Tempesta notified Twenty-First of this decision
on September 16, 1992.
Although cash-flow was generally important to petitioner's
investment decisions, Tempesta did not perform a cash-flow
analysis before agreeing to take part in the ADR transaction.
Rather, Tempesta's investigation of Twenty-First and the ADR
transaction, in general, was limited to telephoning a reference
provided by Twenty-First and reviewing a spreadsheet provided by
Jacoby that analyzed the transaction. Tempesta shredded the
spreadsheet a year after the transaction.
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