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August 03, 1994|From Times Staff and Wire Reports

Piper Investors Sue KPMG Peat Marwick: The plaintiffs say they lost money investing with Piper Jaffray Cos. and that the auditing firm was negligent in examining the books of one of the Minneapolis-based brokerage's money-losing mutual funds. The Institutional Government Income Portfolio lost about a quarter of its value beginning in February as interest rates rose and the value of its mortgage-backed derivatives fell. The investors thought they were buying a "safe, stable, secure" fund when in fact its derivatives holdings were not safe at all, according to a plaintiff's attorney. The suit alleges that if Peat Marwick had done its job properly, the management of Piper would have recognized the risks investors were running and the losses would have been less.

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