2003-04-28 sec-litreleases pdf 16 KB 4,240 chars

SEC v. : 03 Civ. 2942 (WHP)

Exhibit of Federal Court Approves Settlement of SEC Enforcement Actions Involving Conflicts of Interest Between Research and Investment Banking
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summary

U.S. Bancorp Piper Jaffray Inc. paid $10 million to settle SEC allegations of improper research analyst conduct involving misleading buy recommendations, leading to a court-ordered Distribution Fund that compensated investors who bought specific stocks during defined periods, with no legal finding of liability established.

paragraph

U.S. Bancorp Piper Jaffray Inc. agreed to a $10 million federal payment as part of a Final Judgment with the SEC over allegations of biased and misleading research recommendations during the late 1990s and early 2000s. The funds, plus interest, formed a Distribution Fund to compensate investors who purchased equity securities in Esperion Therapeutics, Triton Network Systems, Just for Feet, JDS Uniphase, and Comverse Technology during specified time frames between 1999 and 2002. The court explicitly stated that the identified securities and purchase periods were administrative tools for fund distribution only and did not constitute judicial findings of wrongdoing.

narrative

U.S. Bancorp Piper Jaffray Inc. resolved SEC allegations of improper research analyst conduct—such as issuing misleading buy recommendations while concealing negative views—by agreeing to a $10 million federal payment under a Final Judgment entered on October 31, 2003. This payment, along with any accrued interest, formed a Distribution Fund intended to compensate investors harmed by the firm’s conduct during the late 1990s and early 2000s. The court designated specific equity securities and purchase periods for eligibility: Esperion Therapeutics (Oct. 18, 2001–June 28, 2002), Triton Network Systems (March 30, 2001–May 1, 2001), Just for Feet (April 21, 1999–July 20, 1999), JDS Uniphase (July 27, 1999–Oct. 25, 1999), and Comverse Technology (March 28, 2001–June 26, 2001). Priority for fund distribution was given first to investors in Esperion and Triton, then to those in the other issuers if funds remained. The court emphasized that these designations were solely administrative tools for efficient fund allocation and were not intended as findings of legal liability or precedent. The Distribution Fund Administrator was tasked with creating and implementing a plan to distribute funds equitably and cost-effectively to eligible recipients without adjudicating fault.

Enriched metadata

Scheme
investment-adviser-fraud (100%)
Court
Southern District of New York
Classified investment-adviser-fraud(confidence 100%). EDGAR detection: forms ADV/ADV-E/ADV-W/Form D· recall 33% / precision 13%. detection rule →
Parties
Securities and Exchange CommissionU.S. Bancorp Piper Jaffray Inc.
Keywords
distribution fundequity securitiesdistributionfundsecuritiessecurities questionquestion relevantrelevant periodperiod purchaseequityfund planeligible distributionincrelevantpurchase

Extracted insights

Entities 1
  • company a final judgment as to defendant u.s. bancorp piper jaffray inc.
Triples 9
  • The Court Signed A Final Judgment as to Defendant U.S. Bancorp Piper Jaffray Inc.
  • Section II of the Final Judgment Calls for The creation of a Distribution Fund, which consists of Defendant’s Federal Payment plus any income and interest earned thereon.
  • Section V.A of the Final Judgment Requires The Distribution Fund Administrator to formulate and administer a Distribution Fund Plan intended to provide for the equitable, cost-effective distribution of funds to Eligible Distribution Fund Recipients.
  • Section V.C.1 of the Final Judgment Defines Eligible Distribution Fund Recipients as persons who purchased equity securities in question through Defendant during the relevant period of purchase.
  • Section V.C.1 of the Final Judgment States Identification of the equity securities in question and the relevant period of purchase for each such equity security will be set forth in a further order of the Court.
  • The Court Ordered The equity securities in question and the relevant periods of purchase for each such equity security as follows: Esperion Therapeutics, Inc. Oct. 18, 2001 – June 28, 2002; Triton Network Systems, Inc. March 30, 2001 – May 1, 2001.
  • The Court Ordered The Distribution Fund Administrator to formulate a Distribution Fund Plan that allocates payments first to Eligible Distribution Fund Recipients who purchased the equity securities of Esperion Therapeutics, Inc. and Triton Network Systems, Inc. during the relevant period of purchase for such securities.
  • The Court Ordered The Distribution Fund Administrator to allocate payments next to Eligible Distribution Fund Recipients who purchased the equity securities of Just for Feet, Inc., JDS Uniphase Corp., and Comverse Technology, Inc. during the relevant period of purchase for such securities.
  • The Court Identified The equity securities in question and the relevant periods of purchase made in this Order as solely for the purpose of facilitating the efficient administration of the Distribution Fund Plan.
PDF
SEC v. : 03 Civ. 2942 (WHP) · Source
Text layers
Extracted body text (4,240c) 

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
________________________________________________ 
        : 
SECURITIES AND EXCHANGE COMMISSION, : 
        : 
                                                Plaintiff,                                    :            Civil            Action            No.            
        : 
                        -against-                                                            :            03            Civ.            2942            (WHP)            
        : 
U.S. BANCORP PIPER JAFFRAY INC.,    : 
        : 
    Defendant.   : 
________________________________________________: 
 
ORDER REGARDING DISTRIBUTION FUND PLAN 
 
 On October 31, 2003, the Court signed a Final Judgment as to Defendant U.S. Bancorp 
Piper Jaffray Inc. (“Final Judgment”).  Section II of the Final Judgment calls for the creation of a 
Distribution Fund, which consists of Defendant’s Federal Payment plus any income and interest 
earned thereon.
1
  Under Section V.A of the Final Judgment, “[t]he Distribution Fund 
Administrator shall formulate and administer a Distribution Fund Plan ... intended to provide for 
the equitable, cost-effective distribution of funds to Eligible Distribution Fund Recipients.”  
Under Section V.C.1 of the Final Judgment, to be an Eligible Distribution Fund Recipient, a 
person must have purchased “equity securities in question” through Defendant during the 
“relevant period of purchase.”  Also under Section V.C.1, “[i]dentification of the ‘equity 
securities in question’ and the ‘relevant period of purchase’ for each such equity security will be 
set forth (solely for the purpose of administering the Distribution Fund Plan) in a further order of 
the Court.” 
                                                
 
1
 All defined terms in the Final Judgment apply to this Order. 

 Accordingly, IT IS HEREBY ORDERED that the “equity securities in question” and the 
“relevant period of purchase” for each such equity security, as those terms are used in Section 
V.C.1 of the Final Judgment, are as follows:   
 
Equity Securities in Question   Relevant Periods of Purchase
 Esperion Therapeutics, Inc.   Oct. 18, 2001 – June 28, 2002 
 Triton Network Systems, Inc.   March 30, 2001 – May 1, 2001 
 
IT IS FURTHER ORDERED that the Distribution Fund Administrator shall formulate a 
Distribution Fund Plan that allocates payments (i) in the first instance to Eligible Distribution 
Fund Recipients who purchased the equity securities of Esperion Therapeutics, Inc. and Triton 
Network Systems, Inc. during the relevant period of purchase for such securities; and (ii) if such 
allocation does not exhaust the amount of funds in the Distribution Fund or expected to be in the 
Distribution Fund at the time of payment to Eligible Distribution Fund Recipients, in the next 
instance to Eligible Distribution Fund Recipients who purchased the equity securities of the 
following additional issuers, which securities will also be deemed “equity securities in question” 
during the “relevant period of purchase” identified below for such securities: 
 
Equity Securities in Question   Relevant Period of Purchase
Just for Feet, Inc.    April 21, 1999 – July 20, 1999 
 JDS Uniphase Corp.    July 27, 1999 – Oct. 25, 1999 
 Comverse Technology, Inc.   March 28, 2001 – June 26, 2001 
 
The identification of “equity securities in question” and “relevant periods of purchase” made in 
this Order is solely for the purpose of facilitating the efficient administration of the Distribution 
Fund Plan, is not a judicial or Commission finding, and is not intended to have precedential 
effect in other actions. 
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            SO            ORDERED.            
Dated: New York, New York 
            October            31,            2003            
 
 
                                                                        ________________________________            
                                                                        WILLIAM            H.            PAULEY            III            
                                                                        UNITED            STATES            DISTRICT            JUDGE            
 
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OCR text (3,639c · tika · 95% conf) 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
________________________________________________ 
        : 
SECURITIES AND EXCHANGE COMMISSION, : 
        : 
    Plaintiff,   : Civil Action No. 
        : 
  -against-     : 03 Civ. 2942 (WHP) 
        : 
U.S. BANCORP PIPER JAFFRAY INC.,   : 
        : 
    Defendant.   : 
________________________________________________: 
 

ORDER REGARDING DISTRIBUTION FUND PLAN 
 
 On October 31, 2003, the Court signed a Final Judgment as to Defendant U.S. Bancorp 

Piper Jaffray Inc. (“Final Judgment”).  Section II of the Final Judgment calls for the creation of a 

Distribution Fund, which consists of Defendant’s Federal Payment plus any income and interest 

earned thereon.1  Under Section V.A of the Final Judgment, “[t]he Distribution Fund 

Administrator shall formulate and administer a Distribution Fund Plan … intended to provide for 

the equitable, cost-effective distribution of funds to Eligible Distribution Fund Recipients.”  

Under Section V.C.1 of the Final Judgment, to be an Eligible Distribution Fund Recipient, a 

person must have purchased “equity securities in question” through Defendant during the 

“relevant period of purchase.”  Also under Section V.C.1, “[i]dentification of the ‘equity 

securities in question’ and the ‘relevant period of purchase’ for each such equity security will be 

set forth (solely for the purpose of administering the Distribution Fund Plan) in a further order of 

the Court.” 

                                                 
1 All defined terms in the Final Judgment apply to this Order. 



 Accordingly, IT IS HEREBY ORDERED that the “equity securities in question” and the 

“relevant period of purchase” for each such equity security, as those terms are used in Section 

V.C.1 of the Final Judgment, are as follows:   

 Equity Securities in Question   Relevant Periods of Purchase
 Esperion Therapeutics, Inc.   Oct. 18, 2001 – June 28, 2002 
 Triton Network Systems, Inc.   March 30, 2001 – May 1, 2001 
 

IT IS FURTHER ORDERED that the Distribution Fund Administrator shall formulate a 

Distribution Fund Plan that allocates payments (i) in the first instance to Eligible Distribution 

Fund Recipients who purchased the equity securities of Esperion Therapeutics, Inc. and Triton 

Network Systems, Inc. during the relevant period of purchase for such securities; and (ii) if such 

allocation does not exhaust the amount of funds in the Distribution Fund or expected to be in the 

Distribution Fund at the time of payment to Eligible Distribution Fund Recipients, in the next 

instance to Eligible Distribution Fund Recipients who purchased the equity securities of the 

following additional issuers, which securities will also be deemed “equity securities in question” 

during the “relevant period of purchase” identified below for such securities: 

 Equity Securities in Question   Relevant Period of Purchase
Just for Feet, Inc.    April 21, 1999 – July 20, 1999 

 JDS Uniphase Corp.    July 27, 1999 – Oct. 25, 1999 
 Comverse Technology, Inc.   March 28, 2001 – June 26, 2001 
 
The identification of “equity securities in question” and “relevant periods of purchase” made in 

this Order is solely for the purpose of facilitating the efficient administration of the Distribution 

Fund Plan, is not a judicial or Commission finding, and is not intended to have precedential 

effect in other actions. 

- 2 - 



 SO ORDERED. 

Dated: New York, New York 
 October 31, 2003 
 
 
      ________________________________ 
      WILLIAM H. PAULEY III 
      UNITED STATES DISTRICT JUDGE 

 

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