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CDs would be sold for 80 percent cash and 20 percent LIBOR notes,
and that the LIBOR notes would be distributed to Brunswick and
sold after a brief holding period. Brunswick and ABN also
understood that there would be significant transaction costs
associated with the sale of the PPNs and CDs, as well as the
LIBOR notes. In connection with the foregoing, we dismiss
Brunswick's assertion that it was unaware that it would
eventually bear the transaction costs on the sale of the PPNs and
CDs for cash and LIBOR notes. Indeed, the Zelisko memorandum
suggests that Brunswick knew that it would be expected to absorb
these costs.
Brunswick's records indicate that it incurred net
partnership expenses of at least $6 million. Respondent contends
that circumstantial evidence, including the Zelisko memorandum,
ABN memoranda discussing its fees, the ABN-Brunswick consulting
agreement, the Otrabanda "control" fee that Brunswick paid to
Bartolo, and Brunswick's reallocation of $2,425,000 of expenses
from its partnership reserve account to commissions paid to
Merrill Lynch in connection with the sale of Brunswick's
Technical businesses and Nireco stock, suggest that Brunswick's
partnership expenses were much higher. Respondent contends that
Brunswick disguised its partnership expenses as fees paid to ABN
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