(December 1 – 17:35 ET) – The SEC has slapped a bond fund manager for deviating from his fund’s stated investment objective.

Administrative Law Judge H. Peter Young ordered Piper Capital Management Inc. to cease and desist from violating federal securities laws, censured PCM, revoked its registration to operate as an investment advisor, and imposed monetary penalties of US$2,005,000.

The SEC accused PCM and various PCM employees in connection with the 1994 collapse of the Piper Jaffray Institutional Government Income Portfolio, a diversified mutual fund.

Judge Young determined that the conduct attributable to PCM recklessly violated securities rules by materially deviating from the “consistent with preservation of capital” component of the fund’s stated investment objective.

In addition, Judge Young determined that the fund misrepresented or failed to disclose numerous material facts concerning fund composition, duration, performance, weighted average life, diversification and leverage in fund prospectuses and marketing materials, finding that the fund’s co-manager negligently violated securities rules.

He also found violations by PCM employees, including numerous misrepresentations concerning the primary portfolio manager’s educational background. But he expressly determined it was not in the public interest to bar any of them or to impose monetary sanctions on them.
-IE Staff