Piper Jaffray to Pay $32.5 Million to Settle Wall Street Probe

From Times Staff and Wire Reports

U.S. Bancorp on Monday said its Piper Jaffray securities arm has agreed to pay $32.5 million to join in the settlement of a wide-ranging probe into Wall Street business practices.

Piper Jaffray said it will pay a fine of $25 million and also will pay $7.5 million over the next five years to support independent research options.

The agreement comes after regulators and 10 of the world’s largest investment banks announced a tentative $1.4-billion settlement on Dec. 20.

A group of state and federal regulators, led by New York Atty. Gen. Eliot Spitzer, had been investigating whether the banks put their interests ahead of investors by issuing tainted research and secretly handing out hot stocks to favored clients.

The banks, including Citigroup Inc., also agreed to a number of structural reforms, including prohibiting stock analysts from accompanying bankers on “road shows” and “pitches,” where bankers try to sell their underwriting services.


Deborah Bortner, securities administrator for Washington state, which led the Piper Jaffray investigation, said on Dec. 20 that U.S. Bancorp’s settlement offer was “insufficient by quite a bit.”

The company in the end will pay the least of any of the firms. Citigroup will pay $400 million, the largest fine.

“The fine amount is fair when compared with the rest of the firms, because of their size,” Bortner said Monday.

Minneapolis-based Piper Jaffray, which has 1,200 brokers in 26 states and ranked 23rd this year among U.S. equity underwriters, continued negotiations through the weekend.

San Francisco-based Thomas Weisel Partners, also investigated for its research practices, is now the only firm that hasn’t reached a settlement with regulators.

Weisel officials declined to comment Monday.

A spokeswoman for California Corporations Commissioner Demetrios Boutris, whose office conducted the state investigation of Weisel, said Monday: “Our attorneys are working with the [Securities and Exchange Commission] to determine what will be next for Thomas Weisel. We have nothing to report at this time, however.”

U.S. Bancorp shares rose 32 cents to $21.20 in New York Stock Exchange trading.