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SEC Administrative Judge Fines Piper Jaffray $2 Million
Piper Jaffray is paying another $2 million in connection with its now defunct Institutional Government Income bond fund, which lost 25% of its value in 1994 due to its use of derivative investments (specifically, mortgage-backed inverse floaters). The firm previously has paid about $90 million to cover lawsuits and other regulatory fines.
The fund was sold as one having an investment objective of preservation of capital. In fact, the use of derivatives made it risky, and that was not sufficiently disclosed.
Source: Wall Street Journal, December 4, 2000
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Sponsored by James J. Eccleston, an attorney representing stockbrokers, financial planners and
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