On May 6, 2004, after a three day trial, a jury returned a verdict in favor of defendant Michael Rivers ("Rivers") finding that he did not violate Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. On October 31, 2002, the Commission filed a complaint in the United States District Court for the District of Minnesota against Michael Rivers and his former broker at U.S. Bancorp Piper Jaffray ("Piper Jaffray"), Thomas E. Hall ("Hall"), alleging that they artificially increased the closing price of First Federal Capital Corporation ("First Federal") common stock through "marking the close" transactions and thereby violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. However, the jury found for defendant Rivers and against the Commission on those charges. Previously, Hall consented, without admitting or denying the allegations in the complaint, to the entry of an order of permanent injunction enjoining him from violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and imposing a civil penalty of $50,000. Hall was also subsequently barred from association with any broker or dealer. See Litigation Release No. 17828 (November 5, 2002).
Separately, in a related proceeding, on November 5, 2002, the Commission entered an Order Instituting Proceedings Making Findings and Imposing Remedial Sanctions (Order) against U.S. Bancorp Piper Jaffray Inc. (Piper Jaffray). The Commission's Order found that Piper Jaffray failed to supervise Hall and failed to have adequate systems in place to detect or prevent certain conduct. Piper Jaffray, while neither admitting nor denying the Order's findings, consented to the entry of the Order and the imposition of sanctions against it which included a $100,000 penalty and certain remedial undertakings.