In November 2013, Piper Jaffray and its employee Jane Towery reached a settlement with the SEC in an enforcement action relating to their roles in a $41 million securities offering. The securities in question were bond anticipation notes (BANs) that were issued to finance a public hockey arena located in Wenatchee, Washington. Piper Jaffray , an investment bank headquartered in Minneapolis, MN, was the sole underwriter of these securities. Towery is a managing director at Piper Jaffray focusing on municipal finance.
Apparently, the offering documents for this securities offering contained numerous misstatements of material fact. While another investment bank prepared documents containing these misstatements before Piper Jaffray was retained, Piper Jaffray apparently did nothing to verify the statements and in fact ignored an independent consultant’s findings that the project was not financially viable.
The SEC alleged: “[Piper Jaffray and Towery] did little to verify significant portions of the content, implicitly relying on the efforts of others. Nevertheless, Towery and Piper never contacted the other underwriter and never determined the extent of its due diligence activities.”
Concerning Piper Jaffray’s failure to head the warning of the consultant’s findings, the SEC alleged: “Towery did not ask for or review all the required documents, including the independent consultant’s report that she believed at the time was a feasibility report and the various pro form as prepared by Global. Piper did not have policies and procedures reasonably designed to ensure that Towery’s due diligence was appropriate or that she followed Piper’s policies and procedures.”
Through their settlement agreements, Piper Jaffray and Towery will be censured and will play civil monetary penalties of $300,000 and $25,000, respectively.
Investors who purchased these securities from a Piper Jaffray registered representative may have claims against Piper Jaffray for misrepresentation and unsuitability.
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