SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 3, 1998
DAIN RAUSCHER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-8186 41-1228350
(State of other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
Dain Rauscher Plaza, 60 South Sixth Street
Minneapolis, Minnesota 55402-4422
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 371-2711
Not Applicable
(Former name or former address, if changed since last report.)
Item 5. OTHER EVENTS
Reference is made to Exhibit 99.1 filed herewith.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99.1 Press release announcing registrant's settlement of
litigation.
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
Date: December 4, 1998 DAIN RAUSCHER CORPORATION
By: David J. Parrin
-------------------------------
David J. Parrin
Senior Vice President and
Controller
DAIN RAUSCHER CORPORATION
INDEX OF EXHIBITS
Exhibit No.
- ----------
99.1 Press release announcing registrant's settlement of litigation.
Exhibit 99.1
DAIN RAUSCHER SETTLES MAJOR LAWSUITS
RELATED TO ORANGE COUNTY AND MIDWEST LIFE
MINNEAPOLIS (Dec. 3, 1998) - Dain Rauscher Corporation (NYSE:
DRC) has reached agreements to settle several major lawsuits
brought against the firm in connection with its alleged
involvement in the bankruptcy of Orange County and the failure of
Midwest Life Insurance Company, a former Dain Rauscher
subsidiary. Under terms of the agreements, Dain Rauscher will
pay an aggregate of $35.2 million in cash and five-year notes,
for a total present value of approximately $33 million. The
company admits no wrongdoing and believes these settlements
eliminate the bulk of the litigation exposure it had been facing.
Dain Rauscher said it expects to record a charge of $9.6
million after taxes against fourth-quarter 1998 earnings. The
charge, which is $15 million pretax, includes $24 million in
litigation-related expenses less $9 million in gains on equity
investments. The charge, together with the company's other
reserves, is expected to cover both today's settlements and the
estimated future costs of all litigation matters that are
currently pending.
"We were prepared to go to trial and pursue appeals where
necessary because we strongly believed these suits lacked merit.
Given the growing burden of litigation expense, however, we felt
it was in the best interests of our shareholders, employees and
clients for us to settle. We will be pleased to enter 1999 with
these matters behind us, able to focus on serving our clients and
growing our business," said Irving Weiser, chairman, president
and CEO of Dain Rauscher.
Regarding Orange County, Dain Rauscher will pay $10 million
in cash to the county to settle two separate actions related to
the county's bankruptcy. One action concerned the company's role
as pricing consultant to Orange County on five note issues.
Although Dain Rauscher was engaged strictly to review the
county's fees to its financial advisor, the county claimed that
Dain Rauscher had much broader responsibilities. The other
action concerned the company's role as financial advisor or
underwriter to various school districts, which placed their funds
in the Orange County Investment Pool. Dain Rauscher, which had
no connection with the Orange County pool, denied any wrongdoing.
Regarding Midwest Life, Dain Rauscher will pay $13.2 million
in cash and $12 million over five years, or an aggregate present
value of approximately $23 million, to insurance guaranty
associations in eight states to settle lawsuits related to
Midwest Life. The guaranty associations, which are consortiums
of insurance companies that protect state policyholders against
losses, reimbursed Midwest Life policyholders for losses of up to
$100,000 each after that company went into liquidation in 1991.
States included in the settlement are Iowa, Minnesota, Montana,
North Dakota, Oregon, South Dakota, Washington and Wyoming.
Dain Rauscher continues to be a defendant in a Securities
and Exchange Commission suit related to the company's work with
school districts and municipalities within Orange County, and
Midwest Life cases in Colorado, Louisiana and Nebraska. Dain
Rauscher believes that it has strong legal grounds for its appeal
of the earlier Colorado verdict, and that the Nebraska and
Louisiana cases will be dismissed.
Dain Rauscher Corporation is one of the nation's largest
full-service securities firms with 1,270 private client and
institutional investment executives and 3,600 employees. Founded
in 1909, the Minneapolis-based securities firm serves individual
investors predominantly in the western half of the United States,
and capital markets and correspondent clients in select markets
throughout the nation. The company's broker-dealer, Dain
Rauscher Incorporated, is a member of the New York Stock Exchange
and other major securities exchanges, as well as the Securities
Investor Protection Corp. The company's common stock trades on
the NYSE under the symbol DRC. Its headquarters are at Dain
Rauscher Plaza, 60 S. Sixth St., Minneapolis, Minnesota, 55402-
4422.
Forward-Looking Statements: This press release includes
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, which involve
significant risks and uncertainties. The company cautions
readers that a number of important factors may cause actual
results to differ materially from those contained in forward-
looking statements. These factors include, but are not limited
to, the ability to resolve outstanding litigation in a
satisfactory manner, the ability to recognize gains in certain
equity investments by the company, the level of any future
litigation, general market and economic conditions, and
regulatory actions.
# # #
CONTACT: Jennifer Driscoll, investor and public relations, (612)
373-1647 or [email protected]
