Wechsler & Co., Inc. - Page 8

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          petitioner’s large stock investments in microcap companies, after           
          the market crash in 1987 and extending through the 1990s,                   
          resulted in gains for petitioner.                                           
               Although petitioner was a relatively small company, during             
          the 1990s it acted as a market maker for several hundred                    
          convertible securities.  It listed and traded a much greater                
          number of those securities than its competitors.  Because                   
          petitioner was a boutique dealer in convertible securities, Mr.             
          Wechsler himself often would deal with and advise some of                   
          petitioner’s better customers.  During the 1980s, he developed              
          and improved a computer software program for petitioner to keep             
          track of the convertible securities that it listed and traded.              
              In the spring of 1997, petitioner formally adopted a plan to            
         reduce its institutional and convertible bond business and                   
         concentrate on its own proprietary trading and short-term and                
         long-term investments.  Even before its formal adoption of this              
         plan, Mr. Wechsler had begun to change the focus of petitioner’s             
         business in this manner.  By 1997, Mr. Wechsler realized that the            
         prior advantages petitioner enjoyed as a market maker in the                 
         convertible securities market no longer applied and that                     
         petitioner faced increasing competition from a number of much                
         larger securities investment and trading companies.  Among other             
         things, by the 1990s some major investment and trading companies             
         expanded into the convertible securities market as market makers.            






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