UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 34-40920 / January 11, 1999 ADMINISTRATIVE PROCEEDING File No. 3-9803 ______________________________ : In the Matter of : ORDER MAKING FINDINGS : AND IMPOSING CERTAIN MARKET MAKING : SANCTIONS AS TO ACTIVITIES ON NASDAQ : PIPER JAFFRAY INC. : AND STACEY R. RICKERT ______________________________: I. In the accompanying Order Instituting Proceedings Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 and Findings of the Commission ("Order Instituting Proceedings"), the Securities and Exchange Commission ("Commission") instituted these public administrative proceedings against Piper Jaffray Inc. ("Piper"), Stacey R. Rickert ("Rickert"), and other firms and individuals. Contemporaneously, Piper and Rickert ("Respondents") have submitted Offers of Settlement ("Offers") in anticipation of the institution of these proceedings, which the Commission has determined to accept. In their Offers, Respondents, solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission or to which the Commission is a party, prior to a hearing pursuant to the Commission’s Rules of Practice, and without admitting or denying the findings herein, except for the findings of Section II.A., which are admitted, have consented to the entry of the Order Instituting Proceedings and this Order Making Findings and Imposing Sanctions as to Piper Jaffray Inc. and Stacey R. Rickert (which are hereinafter referred to as the "Orders"). The Commission has determined that it is appropriate and in the public interest to accept the Respondents’ Offers and accordingly is issuing this Order. II. On the basis of the Orders and Respondents’ Offers, the Commission finds[1] the following: A. Respondents Piper Jaffray Inc., a Delaware corporation, is registered with the Commission as a broker-dealer pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act"). At all relevant times, Piper made markets in a number of securities traded in the Nasdaq market. Piper’s principal place of business during the relevant time period was Minneapolis, Minnesota. Piper traded Nasdaq stocks for its own accounts and for the accounts of institutional and retail investors. At all times relevant herein, Piper was a member of the National Association of Securities Dealers, Inc. ("NASD"), a national securities association registered with the Commission under Section 15A of the Exchange Act. Stacey R. Rickert, age 31, resides in Minnetrista, Minnesota and, at all relevant times, was a Nasdaq trader at Piper. As a Nasdaq trader, Rickert was responsible for making markets in certain securities traded on the Nasdaq Stock Market. B. Factual Summary In connection with its activities as a Nasdaq market maker, Piper and Rickert engaged in the following activities, as more fully described in the applicable sections of the accompanying Order Instituting Proceedings, in the following securities and on the following dates. 1. The Fraudulent Coordination of Quote Movements Piper engaged in, or caused, the coordinated entry of quotations on Nasdaq in violation of Sections 15(c)(1) and (2) of the Exchange Act and Rules 15c1-2 and 15c2-7 thereunder, in one or more of the respects described in Section II.C.1. of the Order Instituting Proceedings in a market making transaction or a related series of market making transactions in: a. the stock of Digital Microwave Corp. ("DMIC") on May 20, 1994; b. the stock of Spiegel Inc. - Class A ("SPGLA") on August 25, 1994; c. the stock of Verifone, Inc. ("VFIC") on October 24, 1994; d. the stock of ECI Telecom Ltd. ("ECILF") on October 24, 1994, aided and abetted by its trader, Rickert; e. the stock of ECI Telecom Ltd. ("ECILF") on October 27, 1994, aided and abetted by its trader, Rickert; and f. the stock of 3 Com Corp. ("COMS") on October 24, 1994, aided and abetted by its trader, Rickert. 2. Undisclosed Arrangements to Coordinate Quotations Piper entered, or caused to be entered, in the Nasdaq market fictitious quotations in one or more respects described in Section II.C.2. of the Order Instituting Proceedings in violation of Section 15(c)(2) of the Exchange Act and Rule 15c2-7 thereunder, in a market making transaction or related series of market making transactions in: a. the stock of Amtech Corp. ("AMTC") on November 9, 1994; b. the stock of 3 Com Corp. ("COMS") on October 26, 1994, aided and abetted by its trader, Rickert; and c. the stock of ECI Telecom Ltd. ("ECILF") on October 26, 1994, aided and abetted by its trader, Rickert. 3. Failure to Reasonably Supervise Nasdaq Trading Piper failed reasonably to supervise its Nasdaq market making activities with a view to preventing future violations within the meaning of Section 15(b)(4)(E) of the Exchange Act, in one or more of the respects described in Section II.C.8.a. and b. of the Order Instituting Proceedings. 4. Unlawful Profits and Other Gains While engaged in certain of the improper activities described above, Piper obtained unlawful profits and gains, which, together with interest, total $864.00. III. By reason of the foregoing, Piper willfully violated Sections 15(c)(1) and (2) of the Exchange Act, and Rules 15c1-2 and 15c2-7 thereunder, and failed reasonably to supervise its Nasdaq trading personnel within the meaning of Section 15(b)(4)(E) of the Exchange Act. Rickert willfully aided and abetted and caused violations of Section 15(c)(1) and (2) of the Exchange Act and Rules 15c1-2 and 15c2-7 thereunder. IV. In view of the foregoing and Respondents’ Offers, IT IS HEREBY ORDERED, pursuant to Sections 15(b) and 21C of the Exchange Act, that: 1. Piper shall cease and desist from committing or causing any violation of, and committing or causing any future violation of, Sections 15(c)(1) and (2), and 17(a) of the Exchange Act, and Rules 15c1-2, 15c2-7, and 17a-3 thereunder; 2. Piper shall, within 10 business days of the entry of this Order, pay a civil penalty in the amount of $350,000.00 by wire transfer in accordance with instructions furnished by the Commission staff, or by U.S. Postal money order, certified check, bank cashier’s check, or bank money order, made payable to the Securities and Exchange Commission, which shall be hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Mail Stop O-3, Alexandria, VA 22312, under cover of a letter that identifies Piper as a Respondent in these proceedings and provides the caption and file number for these proceedings; with (a) written confirmation of payment by such wire transfer, or (b) a copy of such cover letter and money order or check, to be sent to Leonard W. Wang, Division of Enforcement, Securities and Exchange Commission, 450 5th Street, N.W., Mail Stop 7-1, Washington, D.C. 20549; 3. Piper shall, within 10 business days of written notice from the Commission staff or the Independent Consultant (as defined below), pay disgorgement in the amount of $864.00 pursuant to Section 21C(e) of the Exchange Act; 4. Piper shall, within 90 days of the date of the entry of this Order, provide to the independent consultant appointed by the Commission in connection with these proceedings (the "Independent Consultant") a description of its policies, procedures and practices relating to prevention or detection of the types of improper conduct involving Piper described in Section II of this Order. Within such time as the Commission directs, the Independent Consultant shall review such policies, procedures and practices with a view to determining if they would reasonably be expected to prevent and detect, insofar as practicable, any of the types of improper conduct involving Piper described in Section II of this Order. Piper shall cooperate with the Independent Consultant’s review of Piper’s policies, procedures and practices, and shall, among other things, provide such further information as the Independent Consultant reasonably requests or that Piper deems relevant to the Independent Consultant’s review, provided, however, that Piper need not provide any information to which it asserts a valid claim of the attorney-client privilege. The Independent Consultant shall maintain the confidentiality of all materials provided by Piper and shall not provide the materials to any person, provided, however, that such materials may be provided to the Commission or its staff. If the Independent Consultant concludes that Piper’s policies, procedures and practices, as presented, would reasonably be expected to prevent and detect, insofar as practicable, any of the types of improper conduct involving Piper described in Section II of this Order, the Independent Consultant shall inform Piper of this conclusion in writing, and his or her responsibilities with respect to Piper shall conclude. If the Independent Consultant cannot conclude that Piper’s policies, procedures and practices meet the aforesaid standard, he or she may recommend changes in or additions to Piper’s policies, procedures or practices for the purpose of improving their ability to meet the aforesaid standard. Piper shall implement all such recommended changes or additions in a timely manner, but in any event no later than three months after receiving the recommendations of the Independent Consultant or such other reasonable time as determined by the Independent Consultant; provided, however, if Piper believes that a change or addition to its policies, procedures and practices recommended by the Independent Consultant is unduly burdensome or unreasonable, it may: (a) propose an equally effective alternative to the Independent Consultant, and, with the Independent Consultant’s approval, implement that alternative in lieu of the Independent Consultant’s recommended change or addition; or (b) petition the Commission, with notice to the Independent Consultant and the Division of Enforcement, for relief from the recommendation of the Independent Consultant. Within three months of receiving recommendations of the Independent Consultant for changes in or additions to its policies, procedures and practices, Piper shall report in writing to the Independent Consultant with respect to the implementation of the recommendations and/or any equally effective alternatives approved by the Independent Consultant. If Piper’s report on implementation is without qualification and states that said recommendations and/or alternatives have been fully and effectively implemented, the Independent Consultant’s responsibilities with respect to Piper shall conclude. If Piper’s report on implementation is qualified, or in any respect indicates that implementation is not full and effective, Piper shall cooperate with all further efforts of the Independent Consultant to ensure that said recommendations and/or alternatives are fully and effectively implemented. When the Independent Consultant concludes that Piper has fully and effectively implemented said recommendations and/or alternatives, he or she shall inform Piper in writing of this conclusion and his or her responsibilities with respect to Piper shall conclude. The fees and expenses of the Independent Consultant arising from his or her review of the policies, procedures and practices of Piper and the other respondent firms subject to the Independent Consultant’s review shall be prorated evenly among such firms, and in such prorated amounts, be paid by each such firm, provided however, that if the Independent Consultant recommends changes or additions to Piper’s policies, procedures or practices, the fees and expenses of the Independent Consultant relating to the making and implementation of those recommendations and/or any alternatives approved by the Independent Consultant, and any disagreements relating thereto, shall be paid by Piper; 5. Rickert shall cease and desist from committing or causing any violation of, and committing or causing any future violation of, Sections 15(c)(1) and (2) of the Exchange Act, and Rules 15c1-2 and 15c2-7 thereunder; 6. Rickert shall, within 10 business days of the entry of this Order, pay a civil penalty in the amount of $40,000.00 by wire transfer in accordance with instructions furnished by the Commission staff, or by U.S. Postal money order, certified check, bank cashier’s check, or bank money order, made payable to the Securities and Exchange Commission, which shall be hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Mail Stop O-3, Alexandria, VA 22312, under cover of a letter that identifies Rickert as a Respondent in these proceedings and provides the caption and file number for these proceedings; with (a) written confirmation of payment by such wire transfer, or (b) a copy of such cover letter and money order or check to be sent to Leonard W. Wang, Division of Enforcement, Securities and Exchange Commission, 450 5th Street, N.W., Mail Stop 7-1, Washington, D.C. 20549; and 7. Rickert be, and hereby is, suspended from association with any broker, dealer, municipal securities dealer, investment adviser or investment company, for a period of 10 weeks, effective one day after the date of this Order. Rickert shall provide to the Commission, within 10 days after the end of the 10-week suspension described above, an affidavit that he has complied fully with the sanctions described in this Section. By the Commission. Jonathan G. Katz Secretary **FOOTNOTES** [1]: The findings herein are solely for the purpose of these proceedings, and are not binding on any person not a respondent in these proceedings. 1