Dec. 9, 2002                                                         Contact:Lucas Hamilton

Morrison to prosecute state's largest securities fraud case

      Helena - State Auditor John Morrison has assumed the role of prosecutor in the state's largest securities fraud case. Morrison's decision marks the first time the state auditor personally has served as the prosecutor of a case brought by the agency.
      The case alleges fraudulent and unethical business practices by U.S. Bancorp Piper Jaffray and its former Butte salesman Thomas J. O'Neill, citing more than 6,000 illegal transactions in the accounts of 38 investors. All tolled, allegations by the auditor's office against O'Neill and Piper Jaffray carry potential maximum fines in the hundreds of millions of dollars. Morrison will disqualify himself as the decision maker in the case in order to prosecute it.
      "This is a complex case of historic proportions, with a tremendous amount of compelling evidence," Morrison said. "I am persuaded that my participation will help ensure a vigorous prosecution."
      Morrison noted that Piper Jaffray and its employees, officers and directors have hired nine attorneys for the defense.
      The State Auditor's office has charged O'Neill with unethical and dishonest business practices, unauthorized trading, making unsuitable trades, using unauthorized discretion in clients' accounts and churning - the practice of trading stocks excessively to generate commissions. He also is charged with two additional counts of fraud. In addition, O'Neill is charged with a failure to comply with a 1997 consent agreement with the State Auditor's office.
      Piper Jaffray executives in Butte and the company's Minneapolis headquarters have been charged with failure to supervise O'Neill, as well as ignoring and encouraging O'Neill's allegedly illegal conduct.
      "Montanans understandably are concerned about the corporate corruption that has been uncovered nationally in recent months," Morrison said. "I intend to make very clear that we will not tolerate that kind of activity in our state."
      Morrison emphasized that investors deserve to know that stockbrokers and securities companies will follow the rules and not violate their trust.
      Morrison suspended O'Neill's securities registration in April 2001 and Piper Jaffray terminated his employment.
      An administrative hearing date is set for September 2003. Stakes in the case have continued to rise with the deaths of two victims and one witness. The average age of the 38 victims identified by the State Auditor's office is 62.
      In addition to the auditor's case, nearly two dozen private civil suits have been filed.