Piper Jaffray Seeks to Reopen, Rename Fund

From Bloomberg Business News

Piper Jaffray Cos. said Wednesday that it is planning to reopen to new investors its bond fund that was ravaged by derivative-related losses in 1994.

Piper is seeking approval from shareholders to change the name of its Institutional Government Income Portfolio and to expand the list of securities the fund can purchase, the company said.

The Piper Institutional Government Income Portfolio was closed to new investors two years ago after the fund lost about one-quarter of its value because of investments in inverse floaters--bonds whose coupon payments rise as a benchmark interest rate falls and vice versa.

The poor performance resulted in a series of lawsuits against Piper, alleging the Minneapolis-based firm misled investors about the fund’s risks. Piper agreed in December to pay $67.5 million to settle a class-action lawsuit.


The net assets of the Piper fund have fallen to $240 million from $650 million since June 1994, when it was shut to new investors, the company said.

The fund rose 24.61% on a total-return basis in 1995, after falling 28.35% in 1994, according to the research group Lipper Analytical Services Inc. It is down about 1.65% on a total-return basis this year, ranking No. 18 of 60 U.S. mortgage funds, Lipper Analytical reported.

Piper is also seeking to rename the fund the Piper Funds Inc.--Intermediate Bond Fund and to stop limiting the fund’s investments to just U.S. government securities.

At the same time, Piper said it’s asking shareholders for approval to merge its $6-million Institutional Government Adjustable Portfolio with its $360-million Adjustable Rate Mortgage Securities Fund.