The U.S. National Association of Securities Dealers has reached a settlement with U.S. Bancorp Piper Jaffray, and one of its investment bankers. The settlement follows an incident in which the firm pulled research in retaliation for not getting a banking assignment.

As part of their settlement with NASD, Piper was censured and fined US$250,000. Managing director Scott Beardsley was censured and fined $50,000. Neither Piper, nor Beardsley admitted or denied the NASD’s findings.

The NASD found that Beardsley, who is the senior banker in the firm’s biopharmaceutical investment banking practice, threatened Antigenics, Inc. by telling them that Piper would discontinue research coverage and stop making a market in the company’s stock if it did not select Piper as lead underwriter for a planned secondary offering. NASD found that the threats were made to force Antigenics to select Piper as lead underwriter.

This conduct violates NASD’s rule requiring all firms and associated persons to adhere to high standards of commercial honor and just and equitable principles of trade. It also has the potential to undermine competition for investment banking services.

“Brokerage firms and their executives cannot use threats regarding research activities as a way to obtain investment banking business. The threat to drop research coverage if Piper was not selected as the lead underwriter for a secondary offering was totally inappropriate and undermines the integrity of the market”, said Mary Schapiro, NASD’s president of Regulatory Policy and Oversight. “It is essential that investors have confidence that decisions firms make about coverage of companies are based on merit and nothing else.”