SECURITIES AND EXCHANGE COMMISSION

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,

D.C.

20549

DIVISION OF

CORPORATION FINANCE

July 20, 2015

Thomas J. Kim, Esq.

Sidley Austin LLP

1501 K Street, N.W.

Washington, DC 20005

Re:

In the Matter of Piper Jaffray & Co.

Waivers of Disqualification under Rule 506(d)(2)(ii) of Regulation D

and Rule 262(b)(2) of Regulation A

Exchange Act Release No. 34-70804, November 5, 2013

Administrative Proceeding File No. 3-15603

Dear Mr. Kim:

This letter is in response to your letter dated May 27, 2015 ("Waiver Letter"), written on behalf of

Piper Jaffray & Co. ("Piper Jaffray") and constituting an application for waivers of disqualification under

Rule 506( d)(2)(ii) of Regulation D and Rule 262(b)(2) of Regulation A under the Securities Act of 1933.

In the Waiver Letter, you requested relief from any disqualification that will arise as to Piper Jaffray

under Rule 506 of Regulation D and Rule 262 of Regulation A by virtue of the Commission's order

entered November 5, 2013 in the Matter of Piper Jaffray & Co., Release No. 34-70804, pursuant to

Sections 15(b) and 15(B)(c) ofthe Securities Exchange Act of 1934 (the "Order").

Based on the facts and representations in the Waiver Letter and assuming Piper Jaffray complies

with the Order, the Division of Corporation Finance, acting for the Commission pursuant to delegated

authority, has determined that Piper Jaffray has made a showing of good cause under Rule 506(d)(2)(ii) of

Regulation D and Rule 262(b)(2) of Regulation A that it is not necessary under the circumstances to deny

reliance on Rule 506 of Regulation D or Regulation A by reason ofthe entry ofthe Order. Accordingly,

the relief requested in the Waiver Letter regarding any disqualification that may arise as to Piper Jaffray

under Rule 506 of Regulation D or Regulation A by reason of the entry of the Order is granted on the

condition that Piper Jaffray fully complies with the terms of the Order. Any different facts from those

represented or failure to comply with the terms of the Order would require us to revisit our determination

that good cause has been shown and could constitute grounds to revoke or further condition the waiver.

The Commission reserves the right, in its sole discretion, to revoke or further condition the waiver under

those circumstances.

Very truly yours,

Sebastian Gomez Abero

Chief, Office of Small Business Policy

Division of Corporation Finance

SIDi:i~Yl

SIDLEY AUSTIN LLP

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thomas.kim@sidley.com

(202) 736-8615

FOUNDED 1866

May 27,2015

By Electronic Mail

Sebastian Gomez Abero, Esq.

Chief, Office of Small Business Policy

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F St., NE

Washington, DC 20549

Re:

In the Matter of Piper Jaffray & Co. and Jane Towery, Release No. 33-94 72

(Nov. 5, 2013)

Dear Mr. Gomez Abero:

We are writing on behalf of Piper Jaffray & Co. ("Piper") in connection with the Order

Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the

Securities Act of 1933 and Sections 15(b) and 15B(c) ofthe Securities Exchange Act of 1934,

Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (the "Order")

against Piper arising out of the above-captioned matter. The Commission issued the Order on

November 5, 2013. We hereby respectfully request a waiver of the disqualification that has

arisen pursuant to Regulation A and Rule 506 of Regulation D under the Securities Act of 1933

(the "Securities Act") with respect to Piper as a result of the entry of the Order.

BACKGROUND

Piper is a registered broker-dealer under the Securities Exchange Act of 1934 (the

"Exchange Act") and a wholly-owned subsidiary of Piper Jaffray Companies, a full-service

investment bank and asset management firm listed on the New York Stock Exchange and

headquartered in Minneapolis, Minnesota. Solely for the purpose of proceedings brought by or

on behalf of the Commission or in which the Commission is a party, Piper consented to the entry

of the Order without admitting or denying the findings in the Order, except as to the

Commission's jurisdiction over Piper and the subject matter of the proceedings, which Piper

admitted.

The Order resulted from the Commission's investigation into whether Piper and one of its

investment bankers, Jane Towery ("Towery"), violated the antifraud provisions ofthe federal

Sidley Austin (DC) LLP is a Delaware limited liability partnership doing business as Sidley Austin LLP and practicing in affiliation with other Sidley Austin partnerships.

Sebastian Gomez Abero

May 27,2015

Page 2

securities laws in connection with Piper's participation as the sole underwriter in the offer and

sale of over $41 million of bond anticipation notes (the "BANs") issued by the Greater

Wenatchee Regional Events Center Public Facilities District (the "District") in November 2008

to finance a multi-use arena and ice hockey rink (the "Project"). According to the Order, the

Official Statement used to market and sell the BANs to investors was materially false and

misleading with respect to (i) the revenue projections for the Project, which revenues were the

primary source of payment for the BANs, and (ii) the extent to which the City of Wenatchee,

Washington, would be able to serve as a backstop for the payment of interest on the BANs. The

District defaulted on the payment of principal on the BANs in December 2011.

According to the Order, the Commission found that Piper and Towery conducted

inadequate due diligence for the offering and, as a result, failed to form a reasonable basis for

believing the truthfulness and completeness of material statements in the Official Statement. The

Commission found that Piper's due diligence policies and procedures at the time of the BANs

offering provided "limited" guidance to its bankers relating to due diligence and that Piper did

not have policies and procedures reasonably designed to ensure that Towery's due diligence was

appropriate or that she followed Piper's policies and procedures.

On September 10, 2012, Piper underwrote the issuance of long-term bonds to refinance

the BANs, which allowed the District to repay principal and accrued interest from the date of

default so that no investors in the BANs were ultimately harmed from the District's default and

they suffered only a temporary loss in liquidity. Piper underwrote these 2012 bonds at a reduced

underwriting discount and made a settlement payment to the District.

In 2012, Piper voluntarily re-evaluated and substantially revamped both (i) its municipal

underwriting due diligence procedures to be followed by its investment banking personnel and

(ii) its supervisory policies and procedures. In December 2012, Piper issued a revised due

diligence policy (the "December 2012 Revised Policy"), as discussed below. Although not

mentioned in the Order, Piper engaged Mr. John M. McNally ofHawkins Delafield & Wood

LLP, a former President ofthe National Association of Bond Lawyers, to advise Piper on

revising its due diligence policy.

Based on their conduct in the BANs offering, the Order found that Piper and Towery

violated Sections 17(a)(2) and 17(a)(3) of the Securities Act. The Order censured Piper and

Towery and required each of them to cease and desist from committing or causing any violations

and any future violations of the same provisions and to pay civil penalties in the amounts of

$300,000 and $25,000, respectively. The Order also required Piper to engage an independent

consultant to review Piper's municipal underwriting due diligence policies and procedures to

ensure compliance with the federal securities laws and to review Piper's supervisory policies and

procedures relating to municipal underwriting due diligence to ensure compliance with the

Sebastian Gomez Abero

May 27, 2015

Page 3

federal securities laws. The independent consultant was required to review and submit a written

report to Piper and to the Commission Staff within 90 days ofthe issuance ofthe Order. In turn,

Piper was required to adopt and implement all recommendations contained in the Report within

30 days of receiving it, and subsequently to certify as to its compliance with the undertakings in

the Order and to certify as to its continued compliance with these undertakings on the first and

second anniversaries of its initial certification of compliance.

Piper engaged Edwards Wildman Palmer LLP ("Edwards Wildman") to serve as its

consultant-specifically, Mr. Walter J. St. Onge III to advise on municipal securities financing

issues and Mr. Stanley Keller to advise on due diligence issues. On February 3, 2014, Edwards

Wildman issued its report (the "Edwards Wildman Report"). Notwithstanding the December

2012 Revised Policy and Mr. McNally's involvement in advising Piper on that revised policy,

the Edwards Wildman Report made the following 12 new recommendations for changes to

Piper's due diligence policies and procedures:

•

establish a formal policy for intake approval of new clients;

•

require each sector to develop a specific approach and plan for due diligence;

•

require a written due diligence plan for each transaction;

•

establish a policy regarding engagement of underwriter's counsel;

•

mandate a due diligence call or meeting as part of every transaction (absent

extraordinary circumstances justifying an exception);

•

require approval and review of written diligence plans, diligence call/meeting

materials and decision regarding engagement of underwriter's counsel as part ofthe

transaction-approval process;

•

create an additional supervisory procedure designed to monitor compliance with

Piper's due diligence policies;

•

clarify formal and informal channels of communication;

•

commit to regular meetings of personnel in Piper's municipal securities business;

•

develop an enhanced intranet to keep personnel apprised of relevant matters;

•

establish and mandate annual training regarding diligence matters; and

•

conduct annual compliance audits regarding diligence policies.

Piper adopted and implemented all ofthese recommendations. On April2, 2014, Piper

certified as to its compliance with the undertakings in the Order, which undertakings included

Sebastian Gomez Abero

May 27,2015

Page 4

adopting and implementing the recommendations in the Edwards Wildman Report. On April 2,

2015, Piper certified as to its continued compliance with the undertakings in the Order.

DISCUSSION

The Order was issued on November 5, 2013 and contains the undertakings described

above to engage an independent consultant to review Piper's municipal underwriting due

diligence policies and procedures as well as Piper's supervisory policies and procedures relating

to municipal underwriting due diligence. We understand that the Staffviews these undertakings

as triggering Piper's disqualification from relying on Rule 506 pursuant to Rule 506(d)(l)(iv)(B)

and from relying on Regulation A pursuant to Rule 262(b )(3 ). 1 Piper requests that the

Commission waive any disqualifying effects that the Order has and will continue to have under

Rule 506(d)(l) and Rule 262(b)(3) with respect to Piper as a result of its entry, on the following

grounds:

1.

The Alleged Misconduct Was Non-Scienter Based

The Commission did not allege in the Order that Piper acted with scienter or intent to

defraud. The Order alleges violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act,

which are civil, non-scienter-based antifraud statutes.

2.

Although the Alleged Misconduct Involved the Offer and Sale ofSecurities, the

Alleged Misconduct Was, an Isolated Incident, of Limited Duration, and Did Not

Involve a Rule 506 Offering

We acknowledge that the alleged misconduct involved the offer and sale of securities, but

we believe this was an isolated incident and of limited duration. Indeed; we note that the Order

observed that Piper stepped in to underwrite the BANs offering "as a last minute replacement for

a predecessor underwriting firm," which had been working on this offering for over a year and

had already completed a preliminary version of the Official Statement. Because access to capital

was disrupted by the financial crisis, the predecessor underwriting firm was unsuccessful in

bringing to market long-term bonds for the District and abandoned the engagement in September

2008. In early October 2008, the Project was substantially completed, with the District's first

lease payment due on November 3, 2008. The District engaged Piper on October 27, 2008 and

sold the BANs on November 13, 2008. According to the Order, "[b]y the time Piper became the

underwriter on the deal, the City and the District were desperate to find financing for the

1

Piper notes that the Order triggers disqualification under Rule 262 as in effect before the April 2015 amendments

to Regulation A, and therefore, "offerings that would have been disqualified from reliance on Regulation A under

Rule 262 as in effect before today's amendments will continue to be disqualified." Amendments for Small and

Additional Issues Exemptions under the Securities Act, Release No. 33-9741 (Mar. 25, 2015), 80 FR 21806, 21856.

Sebastian Gomez Abero

May 27,2015

Page 5

Regional Center within a month because of onerous lease payments being demanded by the

construction lender." It was "[i]n this compressed time frame" that Piper and Towery allegedly

conducted inadequate due diligence. Given the intense financial pressures facing the City and

the District, the withdrawal of the first underwriter, and the lack of liquidity and access to credit

in the markets during these months due to the financial crisis, these and other factors may have

contributed to a difficult environment in which to conduct effective due diligence.

In addition, even though the alleged misconduct involved the offer and sale of securities,

the offering at issue in the Order was not made in reliance on Rule 506. There is no indication

whatsoever that the alleged misconduct is in any way connected to Piper's Private Placement

Group.

3.

The Personnel Involved in the Alleged Misconduct Are No Longer Employed by

Piper

Towery was a Managing Director at Piper at the time of the BANs offering and the senior

banker in charge of the BANs offering. The Order required Towery to limit her activities as an

associated person of a broker-dealer or municipal advisor for 12 months, commencing

immediately upon entry of the Order, by refraining from (i) any contact with any existing or

prospective municipal issuer client or customer for the purpose of conducting, maintaining or

developing business and (ii) making decisions on behalf of a broker-dealer in connection with

any due diligence activities. Towery resigned from Piper in 2013 and is not employed by any

Piper affiliate. Accordingly, there is no ability or opportunity for Towery to work on any matter

on behalf of Piper and its affiliates.

4.

Remedial Steps Were Undertaken

Piper has taken numerous remedial steps to address the conduct at issue in the Order.

Piper's remediation includes steps taken both before and after the Commission's Order.

First, prior to the issuance of the Commission's Order, in 2012, Piper had already

reevaluated its underwriting municipal due diligence procedures to be followed by its investment

banking personnel and its supervisory policies and procedures, and adopted the December 2012

Revised Policy, which:

•

highlighted the importance of due diligence;

•

identified various considerations relevant to formulating a due diligence plan;

•

listed required documentation for due diligence files;

Sebastian Gomez Abero

May 27,2015

Page 6

•

summarized basic due diligence steps and areas of inquiry to be included in the

diligence process; and

•

incorporated enhanced, due diligence checklists specific to Piper's primary

investment banking sectors, which must be completed and filed, together with any

related diligence materials, in the closed deal file for each transaction.

Second, in accordance with the undertakings in the Order, Piper adopted and

implemented the 12 recommendations in Edwards Wildman Report. Many of these

recommendations were implemented through Piper's new Policy on the Due Diligence of

Municipal Underwriters: Negotiated Offerings (dated April 5, 2014) (the "2014 Policy"). In the

2014 Policy, Piper took the following steps:

•

adopted and implemented a new policy for intake approval of new clients;

•

established a subcommittee representing material sectors of its public finance

business that will convene to develop a specific approach and plan for diligence for

specific sectors;

•

adopted and implemented a policy that requires the preparation, supervisory approval,

and submission to Piper's Commitment Committee of a written due diligence plan for

each transaction;

•

adopted and implemented a policy regarding engagement of underwriter's counsel

and formal due diligence call or meeting; and

•

adopted and implemented a policy requiring supervisory review and approval of

written due diligence plans, formal diligence calls or meetings, and decisions

regarding engagement of underwriter's counsel.

Piper implemented other recommendations in the Report through separate policies and

procedures. Those separate policies and procedures included the following:

•

an additional Supervisory Procedure to provide for the monitoring of compliance with

the Revised Procedures;

•

a revised Commitment Committee Charter to provide for the incorporation of due

diligence considerations in its credit reviews;

•

a revised Code of Ethics and Business Conduct that clarified formal and informal

channels of communication;

•

a new Piper intranet section dedicated to due diligence to keep personnel apprised of

relevant matters; and

Sebastian Gomez Abero

May 27,2015

Page 7

•

a new Public Finance Services Due Diligence Compliance Audit Procedure that

2

governs the conduct of compliance audits regarding diligence policies.

Third, on March 17, 2015, Piper completed a voluntary internal audit of its due diligence

processes for its Public Finance Services group. Piper's internal audit was designed to audit

compliance with the enhanced due diligence procedures that were implemented in response to

the recommendations in the Edwards Wildman Report. The audit confirmed that the

recommendations in the Edwards Wildman Report had been implemented. The audit also

recommended additional procedural clarifications to Piper's due diligence procedures, which

Piper is in the process of implementing.

Fourth, Piper will continue to conduct quarterly compliance reviews of its due diligence

processes. Piper fully expects that, in April 2016, it will again certify its compliance with the

recommendations in the Edwards Wildman Report and the undertakings, as required by the

Order.

In sum, Piper has taken and will continue to take concrete steps to remediate the conduct

at issue in the Order. Piper's remediation efforts are designed to preclude the possibility of

similar conduct occurring in the future and make it unnecessary to disqualify Piper from

participating in Rule 506 activities.

5. Material and Disproportionate Impact of Waiver Denial on Piper, on its Affiliates, on

. its Clients, and on Investors

Piper's disqualification from participating in transactions conducted pursuant to Rule 506

of Regulation D has and will continue to have a material adverse impact on Piper and its

corporate finance clients that have retained, or would like to retain, Piper in connection with

Rule 506 offerings, as well as on the investors in these offerings. Since November 2013, Piper's

equities investment banking business served as placement agent for its corporate finance clients

in 19 private offerings that raised over $1 billion from over 20 institutional investors. From

these offerings, Piper earned $21 million in fees. Of these 19 private offerings, five expressly

relied on the Rule 506 safe harbor3 and raised approximately $115 million, for which Piper

earned approximately $5.2 million in fees.

Although this amount of revenue is meaningful for Piper, the ability to raise capital

privately under Rule 506 is even more meaningful from a strategic standpoint. As a full-service

2

The Report recommended that only annual compliance audits be performed. Piper determined that quarterly

compliance reviews of the due diligence process would be more timely and effective than an annual review, so its

new policy implemented quarterly compliance audits of the due diligence process.

3

These are the private offerings for which a Form D was filed.

Sebastian Gomez Abero

May 27,2015

Page 8

investment bank with a particular focus on the middle market, it is imperative that Piper be able

to raise capital on behalf of its clients in both the public offering markets and the private offering

markets. Piper's private placements often cement its relationships with clients and thereby lead

to future advisory or capital-raising opportunities. Over the past decade, approximately 40% of

Piper's private placement assignments have been followed by additional transactions or advisory

assignments. For example, Piper has had numerous instances in which a successful Rule 506

private capital raise for a client has led to an engagement to underwrite the client's IPO and

subsequent follow-on offerings or an engagement to act as the client's M&A advisor. Moreover,

many of Piper's clients require the flexibility to be able to conduct a private offering if market

conditions warrant, and Piper cannot effectively serve those clients if it is disqualified under

Rule 506. If Piper is unable to offer the full suite of fundraising services (including Rule 506

offerings), it will not be able to compete effectively against other investment banks in meeting

the needs of its clients-in particular, its middle-market clients that may not be big enough to

raise capital in a registered offering but present healthy businesses and attractive investment

opportunities for institutional investors.

Once Piper understood that the Order disqualified it from participating in Rule 506

offerings, Piper suspended its activities conducted in reliance on Rule 506. Without a waiver,

this period of suspension will continue until April 2, 2016, when Piper certifies its continued

compliance with the undertakings on the second anniversary of the initial certification. During

this disqualification period, Piper will not be able to compete for or to continue working on

engagements in which its clients or prospective clients choose or are advised to conduct their

offerings in reliance on Rule 506. As market practice favors the use of Rule 506 because it

provides issuers and market participants with the benefit of a safe harbor, Piper's inability to

participate in Rule 506 offerings could lead to the loss of numerous private placement

opportunities. Piper's lost opportunities are not limited solely to any fees Piper would have

earned in connection with such engagements, but also include the missed chances to develop

strategic relationships with clients. In addition, it is possible that some of Piper's employees

who participate in Rule 506 offerings could seek employment elsewhere so that they can

continue to serve clients, and their clients could leave with them.

We submit that the impact of Rule 506(d)(1)'s disqualification on Piper, its affiliates and

its clients today-and over the next year if the waiver is not granted-is disproportionate to the

trigger for the disqualification, which is the undertakings to engage a consultant to review

Piper's municipal underwriting due diligence policies and procedures, to adopt and implement

the consultant's recommendations, and to certify compliance with such undertakings for two

years. In light of the limited nature of the violations in the Order and the fact that the

disqualification stems not from the conduct at issue in the Order, but rather, the remedial

measures that Piper has agreed to and is in compliance with, we do not believe that Piper's

Sebastian Gomez Abero

May 27, 2015

Page 9

disqualification from relying on Rule 506 until April 2, 2016 is reasonable, warranted or in the

public interest.

6.

Adoption of Recent Amendments to Regulation A Could Result in an Active

Regulation A Market, in which Piper Will Want to Compete

On March 25,2015, the Commission adopted rule amendments increasing the amount of

capital that can be raised under Regulation A to $50 million, which amendments take effect on

June 19, 2015. Although Piper's clients historically have not relied on Regulation A because of

the current $5 million limit on the amount of capital that can be raised, once the limit is raised to

$50 million, it is reasonably likely that Piper's clients may want to consider relying on

Regulation A to raise capital. For example, since January 2013, Piper has served as bookrunner

or co-manager on 9 initial public offerings that raised $50 million or less. Each of these

offerings could have been conducted pursuant to Regulation A had the amendments been in

effect at that time.

Piper is the most active middle market investment bank in its core focus sectors, which

include business services; clean technology and renewables; consumer; diversified industrials

and services; financial sponsors; healthcare; and technology, media and telecommunications.

For companies in the middle market, Regulation A+ would appear to be an attractive alternative

to registration. If the recent amendments are successful in creating an active market for

Regulation A offerings, then Piper's disqualification from participating in these offerings will

have a material adverse impact on Piper and its corporate finance clients that would like to retain

Piper in connection with Regulation A offerings. For the same reasons outlined above with

respect to Rule 506, we do not believe that Piper's disqualification from relying on Regulation A

is reasonable, warranted or in the public interest.

7.

Disclosure of Written Description of Final Judgment to Investors

Piper will furnish (or cause to be furnished) to each purchaser to whom Piper offers and

sells securities in a Rule 506 offering or in a Regulation A offering that would otherwise be

subject to the disqualification under Rule 506(d)(l) or Rule 262, respectively, as a result ofthe

Order, a description in writing of the Order a reasonable time prior to sale.

Sebastian Gomez Abero

May 27,2015

Page 10

REQUEST FOR WAIVERS

In light of the grounds for relief discussed above, we believe that disqualification is not

necessary under the circumstances and that Piper has shown good cause that relief should be

granted. Accordingly, we respectfully urge the Commission, pursuant to Rules 506(d)(2)(ii) and

262, to waive the disqualification provisions in Rules 506 and 262 under the Securities Act,

respectively, to the extent they may be applicable to Piper as a result of the entry of the Order. 4

Sincerely,

4

We note in support of this request that the Commission has granted relief under Rule 506 of Regulation D for

similar reasons or in similar circumstances. See BlackRock Advisors, LLC (April 20, 20 15); H. D. Vest Investment

Securities, Inc. (March 4. 20 15); Barclays Capital Inc., Rei. No. 33-9651 (Sept. 23, 20 14); Wells Fargo Advisers,

LLC, Rei. No. 33-9649 (Sept. 22, 2014); Dominick & Dominick LLC, Release No. 33-9619 (July 28, 2014); Jefferies

LLC, (March 12, 2014); Credit Suisse Group AG (Feb. 21, 2014); Instinet, LLC (Dec. 26, 2013). We believe that

had Piper sought a waiver at the time of the issuance of the Order, the Commission would have granted the waiver,

just as it has done in these cases.

Piper is not requesting a waiver of disqualification from relying Rule 505 of Regulation D at this time because it

does not now use or participate in transactions under such offering exemption. Piper understands that it may request

such waivers in a separate request if circumstances change.