Opinion ID: 521926
Heading Depth: 2
Heading Rank: 2

Heading: DeRance Investment With PaineWebber

Text: 4 In late 1981, after reading an article about Sarnoff in a magazine, John called Sarnoff, then working for another company, and told him that he wanted to invest in gold. After moving to PaineWebber, Sarnoff called John in July, 1982, and suggested to him that the time was right to invest in commodity futures. 2 To win the account, Sarnoff boasted that he knew more about gold trading than anyone else in the country, and, according to notes John made in his business journal, that Sarnoff's trading will provide us regular income. Sarnoff also told John about all the diverse commodities he invested in, the metals and the T-bills, even though Sarnoff had no experience in trading commodities. Sarnoff's assistant at PaineWebber told John Miller, DeRance's outside counsel, that Sarnoff had invested in gold for other institutional investors. In line with John's recommendation, DeRance's board decided on August 20, 1982, to establish its F Fund with PaineWebber. This separate fund was so named to complement its stock portfolio, held in DeRance's E Fund (which was not invested through PaineWebber), which contained approximately $150 million worth of common stock. In the fall of 1982, DeRance delivered approximately $8 million to PaineWebber to establish the F Fund. PaineWebber put DeRance's money into treasury bills while the parties negotiated a trading agreement.