Compaq Computer Corporation and Subsidiaries - Page 8




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          current market prices.  Thus, when, between the sixth and seventh           
          trades, the market price changed, Leo modified the price for                
          subsequent trades to compensate for the change.  In addition,               
          NYSE rule 76 required an open outcry for each cross-trade, and              
          NYSE rule 72 allowed other traders on the floor or the                      
          "specialist" responsible for making the cross-trades to break up            
          the transaction by taking all or part of the trade.  However, for           
          cross-trades priced at the market price, there was no incentive             
          to break up the transaction.                                                
               Pursuant to the "next day" settlement rules, the purchase              
          cross-trades were settled between petitioner and Gallagher on               
          September 17, 1992.  On that date, Gallagher's account with Bear            
          Stearns was credited $887,547,543 for the purchase trades,                  
          including a reduction for Securities and Exchange Commission fees           
          (SEC fees) of $29,586.  Gallagher was subsequently reimbursed for           
          the SEC fees.  Also on September 17, 1992, petitioner transferred           
          $20,651,996 to Bear Stearns, opening a margin account.                      
               On September 18, 1992, at 10:47 a.m., petitioner complied              
          with the applicable margin requirements, transferring $16,866,571           
          to its margin account with Bear Stearns.  The margin requirement            
          for purchase and sale transactions completed on the same day was            
          50 percent of the purchase price of the largest trade executed on           
          that day.  It was not necessary to make payments for each                   
          completed trade.  Accordingly, this wire transfer was made by               





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