The Charles Schwab Corporation and Subsidiaries - Page 51

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          meet the spirit and letter of the subject regulation.  Mr.                  
          Dodds’s uncontradicted testimony reflected that there were some             
          differences in the categorization of accounts25 and in the                  
          individual trading volume or activity of customers, but that the            
          clientele of both firms was substantially similar.  Both were               
          discount brokerages, and they competed in the same market for               
          their clientele.                                                            
               Petitioner also notes that respondent’s expert’s report,               
          using petitioner’s preacquisition revenue experience, resulted in           
          predictions of the postacquisition revenue stream from Rose                 
          accounts with better than 80-percent accuracy in early years and            
          98-percent accuracy for the third and fourth years after                    
          acquisition.  Further, petitioner highlights the fact that it was           
          the leader in the discount broker industry with a 42.4-percent              
          market share.  That fact made petitioner’s experience, within the           
          meaning of the regulation, sufficiently “adequate” to determine             
          the useful lives that the Rose accounts were likely to have in              
          the context of petitioner’s business.                                       
               Ultimately, the disagreement between the parties boils down            
          to the degree of similarity needed to invoke the use of one’s own           


               25 Specifically, Rose had more institutional customers.                
          Respondent also argues that petitioner’s expert (Mr. Knoblick)              
          used shorter lives in his analysis than were estimated by Mr.               
          Dodds in connection with the preacquisition analysis of Rose.  We           
          pay little heed to respondent’s point because Mr. Knoblick’s                
          analysis was based on an actuarial approach, comprising a                   
          complete historical analysis of all of petitioner’s accounts.               




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