A nine-year-old blowup continues to haunt Piper Capital Management. The SEC revoked the firm's registration as an investment advisor and fined it $2 million saying that it broke securities laws in its Institutional Government Income Portfolio fund in 1994.

The action, which was in response to an appeal filed in 2000, will not effect the operation of any funds as Piper Capital is now longer actively running any funds. U.S. Bancorp purchased the firm in 1998.

"The bank looks forward to putting this historical matter to rest. It involves underlying matters going back to 1994 and does not involve any of the bank's current operations," said Steve Lentz, U.S. Bancorp Asset Management general counsel in a statement regarding the regulator's decision.

The problems in the fund came to light in April of 1994 with a downturn in the fixed income markets. The fund, which was run by portfolio manager Worth Bruntjen, had made large investments in fixed income derivatives known as "kitchen sink" bonds starting in 1991. Those investments became worthless during the downturn, wiping out much of the value of the fund. Piper closed the fund later that year.

Since then, the losses have been a subject of lawsuits and regulatory inquiry. In 1999, the SEC barred Bruntjen from the securities industry for five years and ordered him to pay $100,000.

In its most recent action the SEC found that Piper Capital had "misrepresented or omitted material facts concerning the risk of investing in the fund, and materially deviated from the fund's stated investment objective, without shareholder consent." It further said that principals in the fund had "all knowingly participated in a process intended to alter the fund's net asset value."

The SEC said it sanctioned Marijo Goldstein, Robert Nelson, Amy Johnson and Molly Destro in connection with the case.  

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