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risk that compares the volatility of a specific stock to the
market as whole) representing the median beta for six “smaller”
publicly traded broker-dealers.
Mr. Matthews has failed to persuade us of the reliability of
his return-on-equity comparison between the 17 broker-dealers and
petitioner because he has failed to convince us that the 17
broker-dealers are comparable to petitioner, whose business
interests were varied, as described in our findings of fact, and
include an increasing concentration on its own proprietary
trading and short-term and long-term investments. He has
likewise failed to persuade us that his capital asset pricing
model analysis is reliable because he has failed to persuade us
of the comparability to petitioner of the six publicly traded
“smaller” companies that he used to determine beta.
We also question whether a 10.4-percent compounded annual
rate of return would be “highly satisfactory” to an independent
investor in petitioner when compared to the compensation paid to
petitioner over the 1992 through 1998 period. Mr. Matthews’s
calculations show that petitioner’s adjusted common stock equity
increased by $14.546 million, from $14.533 million to $29.079
million during that period. For that same period, petitioner
compensated Mr. Wechsler $37.992 million. That $37.992 million
is more than 2.5 times the $14.546 million increase in
petitioner’s adjusted common stock equity. Thus, for each dollar
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