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Piper JaffrayWhat is Piper Jaffray? Piper Jaffray, now known as U.S. Bancorp Piper Jaffray, is a Minneapolis-based brokerage and investment banking firm that was formed in 1895. The company provides financial information, products, and services to businesses, individuals, and institutions. It operates more than 120 offices in 25 states, employs more than 2,900 investment bankers, sales and trading executives, research analysts, and financial advisors, and is one of the nation’s most powerful firms in its class. Why is Piper Jaffray accused of fraud? In one of the largest securities fraud cases in Minnesota’s history, U.S. Bancorp Piper Jaffray is accused of making more than 6,000 fraudulent transactions in the accounts of 38 of its investors between June 1999 and June 2001. The company also allegedly paid other firms to publish research on its underwriting clients but failed to ensure that those payments were disclosed and neglected to sufficiently supervise its divisions. Specifically, Piper Jaffray is accused of: · Issuing research reports that violated NASD and NYSE rules to Esperion Therapeutics, Inc. and Triton Network Systems · Failing to disclose that it received more than $18 million in payment for research coverage performed for various companies · Failing to disclose that it paid portions of underwriting proceedings to other firms for research it performed · Neglecting to effectively monitor its research and investment banking divisions to ensure that both complied with federal securities laws and NASD and NYSE rules. Who were the key players in the fraud? Although the entire company is under scrutiny, former U.S. Bancorp Jaffray stockbroker Thomas O’Neill has been charged with administrative fraud and is facing at least 35 civil lawsuits. O’Neill has a history, officials say, of volatile trading and is accused of making thousands of unethical, unwanted, and illegal trades. According to Piper Jaffray representatives, O’Neill was terminated in March 2001 and has been suspended from trading. In addition, chairman Tad Piper, president Andrew Duff, former head of retail Ross Rogers, and at least 10 other executives are being investigated on possible fraud charges. What is the status? On April 28, 2003, the Securities and Exchange Commission announced a settlement with U.S. Bancorp Piper Jaffray. Piper Jaffray agreed to pay $12.5 million in penalties and fines and $12.5 million in disgorgement. Exactly one-half of the total payment will be and placed into a fund that will be divided among customers who were defrauded by the firm. The remaining $12.5 will be used to resolve all remaining state regulators’ proceedings. In addition, Piper Jaffray accepted a federal court order prohibiting the firm from disobeying NYSE and NASD rules and all federal securities laws; the order also calls for the restructuring of the company’s equity research and banking divisions to ensure that the departments will not influence one another. Finally, the settlement stipulates that Piper Jaffray must foot the $7.5 million bill for firm clients’ independent research over the course of five years. |