Piper Jaffray agrees to pay $25 million to settle charges after investigation

MINNEAPOLIS (AP) -- U.S. Bancorp Piper Jaffray will pay $25 million and agreed Monday to change the way they do business to resolve charges they gave biased stock ratings.

Piper Jaffray agreed in principle with federal and state regulators to resolve an industrywide review that alleged 12 of the nation's largest investment firms misled investors by inflating stock ratings to help their firms win investment banking business.

The case drew widespread attention when authorities uncovered e-mails in which analysts privately derided stocks they were touting to the public and helped lead to the current crisis of confidence on Wall Street.

Piper Jaffrey had held out while ten other firms -- including Citigroup, Goldman Sachs and Credit Suiss First Boston -- agreed to pay $1.44 billion in a Dec. 20 settlement with the New York Attorney General's Office, which handled the negotiations. In addition to $900 million in fines, the firms also will pay $450 million over five years for independent research and $85 million for a nationwide investor education program.

In agreeing to the fines, the firms would neither admit nor deny charges that they had misled investors.

Piper Jaffray and Thomas Weisel Associates raised objections over the settlement and continued negotiations.

Besides the $25 million in fines, Piper Jaffray will pay $1.5 million annually for five years. The firm also agreed to make "structural changes" relating to its research and investment banking program, but it did not state what specific changes would be made.

"Since this process began, our regulators and we have shared the goals reinforcing equity research independence, bringing about progressive changes to various industry practices and restoring confidence in capital markets system," Andrew Duff, president and chief executive officer of Piper Jaffray, said in a statement. "We believe this settlement will accomplish these goals."