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Bottom bracket spindle from a Fisher CR-7. From http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=140388591810 as of 2010/03.
Spindle service history and failure injuries unknown.
The circlip locates the spindle axially, but is also a stress riser. Some other Fisher models use a center spacer which is bonded to the spindle using high-strength LocTite(tm) or the equivalent. Avoiding the groove removes a stress riser; further, the glue is much weaker than than the spindle and metal so the transition to the larger-diameter spacer cannot substantially concentrate stress.
See also FAIL-144.html