Former fund manager to pay $100,000 fine
February 1, 1999
Worth Bruntjen, a former portfolio manager for the asset management unit of the Piper Jaffray Cos., last week agreed to pay $100,000 to settle SEC charges that he misled investors about his derivative investments from 1992 through at least April, 1994.
In addition to the fine, Bruntjen, 62, agreed to a five-year suspension from the securities industry for allegedly exposing shareholders to "undisclosed risks" by holding up to 90 percent of the assets in the Piper Jaffray Institutional Government Income fund in derivatives, most of which the SEC said were unhedged, high-risk and interest-sensitive.
Bruntjen bought and held the derivatives at the same time he approved language in marketing materials and prospectuses which the SEC said misrepresented the fund's investment strategies and risk. Bruntjen neither admitted nor denied the allegations in settling the case.
The SEC sued Bruntjen, Piper Capital Management -- which is now owned by U.S. Bancorp -- and five other current and former Piper officials in July for their conduct involving the Institutional Government Income fund. (MFMN 8/3) The SEC said the trial involving the remaining parties is scheduled to begin Feb. 16.
In its settlement with Bruntjen, dated Jan. 26, the SEC said that the Institutional Government Income fund was marketed as a conservative investment. By March, 1993, more than 75 percent of the fund was invested in derivatives whose value would fall if interest rates rose, the SEC alleged. SEC officials said in July that investors lost more than $100 million when interest rates rose in 1994.
The SEC said Bruntjen also falsely claimed he had received a business degree with honors from the University of Minnesota.