Lately, Deb Bortner, director of the Securities Division of the Washington State Department of Financial Institutions, has been reading e-mails from securities analysts--messages that create the appearance that U.S. Bancorp subsidiary Piper Jaffray may be another in the growing list of tainted investment banking firms. The messages appear to show that Piper may have tailored stock recommendations to win business, and tied analysts' pay to the success of investment banking deals.

"Some of these e-mails, at least out of context, would lead one to believe that some of those kinds of things went on [at Piper]," Bortner says. U.S. Bancorp has a major commercial banking presence in Washington.

Since May, Bortner has been heading up the investigation of Piper as part of a national probe of brokerage firms involving regulators from a dozen states.

The Piper investigation, which Bortner believes is one of the largest her department has undertaken, centers on 21 compact disks' worth of Piper records involving tens of thousands of e-mails going back roughly three years. "We're going back to the heyday," she says. Between 1999 and 2001, Piper helped underwrite initial public offerings for more than 130 businesses, including many tech companies. Though the investigation has "gotten quite far," an end date has not yet been set, and regulators continue to take depositions from Piper employees. Bortner states that given the evidence collected, talk of a monetary settlement and a commitment by the firm to change its policies is "not premature," but says such talks have not yet taken place.

The national effort, organized by the North American Securities Administrators Association, began after New York Attorney General Eliot Spitzer uncovered e-mails in which a star Merrill Lynch analyst privately derided some Internet companies while publicly giving them top ratings, generating large fees for Merrill's bankers. Many of the companies later went under. The devastating revelations drove Merrill to settle with Spitzer for $100 million.

"We didn't get the speediest response from [Piper]," Bortner says, adding that the company continues to resist some requests from regulators. Piper did not return calls.