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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) August 15, 1995
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McDonald & Company Investments, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-8526 34-1391950
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1400 McDonald Investment Center, Cleveland, Ohio 44114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 443-2300
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Not Applicable
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
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On August 15, 1995, a complaint in a lawsuit captioned STEPHANIE TUBBS JONES
EX. REL. THE STATE OF OHIO AND THE COUNTY OF CUYAHOGA V. MCDONALD & CO.
SECURITIES, INC., ET. AL. was filed in the Court of Common Pleas, Cuyahoga
County, Ohio. The action arose out of losses allegedly incurred by Cuyahoga
County's Secured Assets Fund Earnings Program ("SAFE"). The registrant's
wholly owned subsidiary, McDonald & Company Securities, Inc. ("McDonald
Securities"), along with six other defendants, were named in the lawsuit. The
complaint alleges that, in breach of various legal duties allegedly owed to the
plaintiff, McDonald Securities and/or the other defendants enabled, facilitated
and/or assisted the County's investment staff to engage in unsuitable and
inappropriate investment and trading activities and practices that were in
violation of the County's investment policies, speculative and highly risky.
According to the complaint, the investment activities engaged in by the County
included the use of reverse proceeds trading, "mismatched" transactions,
"pair-off" transactions, and other investment and trading strategies that
significantly leveraged the SAFE Program's portfolio.
In addition, the complaint makes allegations against McDonald Securities and
another defendant arising out of their respective roles as underwriters of two
issuances of approximately $377 million in tax and current revenue anticipation
notes ("TANS/CRANS") during 1993 and 1994. The complaint alleges that McDonald
Securities and the other defendant introduced to the County the concept of
issuing TANS and CRANS and, in violation of alleged legal duties, represented
that the concept was a "wise and safe course of action" that "would generate
better cash flow and improved investment earnings for the County," while
failing to disclose that engaging in such issuances would allegedly result in
the incurrence of additional debt by and increased risk to the County.
The complaint alleges that the defendants' actions resulted in "tens of
millions of dollars" of losses to the County and its residents, and seeks to
hold each of the defendants liable for an unspecified amount of compensatory
and consequential damages arising out of their alleged negligence and breaches
of fiduciary duties owed to the plaintiff. In addition, the plaintiff seeks to
hold McDonald Securities and the other defendant that participated as an
underwriter of the TANS and CRANS offerings liable for an unspecified amount of
compensatory, consequential and punitive damages for violations of certain
anti-fraud provisions of the Ohio Securities Act, actual and constructive
fraud, and negligent misrepresentation.
The action has only recently commenced, and no discovery has taken place.
However, based on the facts known to date, the registrant believes that the
plaintiff's claims against McDonald
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Securities are without merit, and intends to contest vigorously the allegations
in the complaint.
On August 15, 1995, the registrant issued a press release responding to the
lawsuit, a copy of which is filed as Exhibit 99 to this Report.
Item 7. Financial Statements, Pro Forma Information and Exhibits
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The following exhibit is filed as part of this Report:
Exhibit No. Description Page
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99 Press release issued August 15, 1995 5
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized on the 19th day of September, 1995.
McDONALD & COMPANY INVESTMENTS, INC.
(Registrant)
By:/s/ William B. Summers, Jr.
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William B. Summers, Jr.,
President and Chief Executive Officer
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EXHIBIT 99
FOR IMMEDIATE RELEASE
CONTACT: Richard J. Clark
216-443-2614 or 800-553-2240
MCDONALD & COMPANY RESPONDS TO CUYAHOGA COUNTY LAWSUIT
CLEVELAND -- August 15, 1995 -- McDonald & Company Investments, Inc. (NYSE:
MDD) today responded to the filing of a lawsuit against its McDonald & Company
Securities, Inc. subsidiary by the County of Cuyahoga. The suit seeks to
impose liability on McDonald, other brokerage firms and a bank for losses
incurred by the County in its SAFE investment program.
William B. Summers, Jr., McDonald & Co.'s Chairman and Chief Executive Officer,
said "We deeply regret the County's decision to attempt to hold others
responsible for losses resulting from its own decisions. As a major Cuyahoga
County employer and taxpayer, we are extremely concerned by the SAFE program's
losses. The simple truth, however, is that these losses did not result from
any actions by McDonald & Co. or any of its personnel. Our business with the
County was conducted in a professional manner and in compliance with applicable
laws. We are not responsible for the SAFE program's losses, and firmly believe
that the County's claims against us are without merit."
McDonald & Company Investments, Inc., through its principal subsidiary,
McDonald & Company Securities, Inc., operates a regional investment banking,
brokerage, and investment advisory business.
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