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the Treasury bills that it sold short ($344,447,250) as a liability
on its opening balance sheet.
For the period December 17 through 27, 1992, Salina earned
$398,292 on its investments for an annualized return of 17.62
percent.
C. FPL’s Investment in Salina
On December 14, 1992, Mr. Evanson obtained authorization from
FPL’s board of directors to invest in the Salina partnership. The
minutes of the December 14, 1992, board of directors’ meeting state
in pertinent part:
[The Chairman] reported that the officers of the
Corporation were considering investing approximately $75
million of the funds raised from the sale of common stock
in 1992 for future capital requirements in an investment
partnership. These funds were not needed immediately and
were currently invested in short-term securities yielding
a little more than 3% per annum. Investing in the
partnership would increase the return on the funds
substantially and still keep them available for capital
expenditures as needed. In addition, the partnership
could engage in certain transactions that could utilize
certain of the tax losses from the sale of Colonial Penn.
Mr. Evanson then explained the proposed investment
activities of the partnership.
FPL conditioned its participation in the partnership upon
Salina’s agreements to: (1) Appoint Mr. Silverstein as its
investment manager, and (2) liquidate its investments by December
30, 1992. Salina agreed to FPL’s conditions. On December 28,
1992, Salina executed a “Financial Advisory Agreement” appointing
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