Category Archives: Piper Jaffray

Investment firm Piper Jaffray & Co. has been fined $700,000 by the Financial Industry Regulatory Authority (FINRA) for email retention violations, related disclosure issues and supervisory and reporting violations.

According to a statement issued by FINRA, Piper Jaffray failed to retain approximately 4.3 million emails from November 2002 through December 2008. The company also failed to inform FINRA of its email retention and retrieval issues.

This isn’t the first time Piper Jaffray has been cited for email retention deficiencies. Information on FINRA’s Web site reports that the company was sanctioned in November 2002 in a joint action by the Securities and Exchange Commission (SEC), the New York Stock Exchange Regulation and NASD following investigations tied to conflicts of interest between Piper’s investment banking and research departments. As part of that settlement, Piper Jaffray was required to review its systems and certify that it had established systems and procedures designed to preserve electronic mail communications.

In settling the latest matter with FINRA, Piper Jaffray neither admitted nor denied the findings.

Read FINRA’s action against Piper Jaffray here.

Last year, the Montana State Auditor’s Office took a rather unusual approach to educate investors about the dangers of investment fraud. It teamed up with the AARP to produce Fraud Under the Big Sky, an hour-long documentary highlighting two major cases of securities fraud in Montana, including one that involved stockbroker Thomas J. O’Neill and Piper Jaffray & Co.

The O’Neill/Piper Jaffray case reveals how O’Neill “churned” the accounts of his clients, making an excessive number – more than 6,000 – of unauthorized trades in order to generate huge commissions for himself. Many of O’Neill’s clients were elderly. Evidence later showed that one of the victims was a 92-year-old man, who had seven speculative trades made in his account while in a coma. A final trade was conducted hours after he had died. O’Neill pleaded guilty in U.S. District Court in January 2005 to wire and securities fraud for activities from 1997 to 2001. In April 2005, he was sentenced to two years in prison for defrauding clients.

This year, in February 2009, O’Neill filed a lawsuit in a Butte district court against his former employer, accusing Piper Jaffray of destroying hand-written records while he worked for the firm that could have been used to help in his defense. The complaint also alleges that the records provide evidence that O’Neill had followed Piper Jaffray’s business plan and that the firm also reviewed and approved all of O’Neill’s transactions.

O’Neill’s complaint further accuses Piper Jaffray of knowing its business plan was fraudulent yet allowing him to continue implementing it.

Based in Minneapolis, Piper Jaffray’s origins date back to 1895. Over the years, the company evolved into one of the most powerful brokerage and investment firms in the United States. At the same time, however, Piper Jaffray also acquired a slew of investor complaints, regulatory sanctions and allegations of securities fraud, unauthorized trading and misuse of research for financial gain. On the latter allegation, Piper Jaffray reached a settlement in 2003 with the Securities and Exchange Commission (SEC), NASD, NYSE, NASAA, and the New York Attorney General and agreed to pay a $32.5 million fine.

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