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
August 27, 1998
(Date of Report (Date of earliest event reported)
BNL FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
IOWA 0-16880 42-1239454
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
301 Camp Craft Road, Suite 200
Austin, Texas 78746
(512) 327-3065
(Address, including zip code and telephone number,
including area code, of registrant's principal offices)
Item 5. Other Events.
The Company has previously reported in its filings on Form 10QSB and 10KSB the
pendency of a class action complaint filed by Myra Jo Pearson and Paul Pearson
in the Circuit Court of Pulaski County, Arkansas (3rd Division) naming the
Company, BNL Equity Corporation and several officers of the Company, as
defendants. The plaintiffs have alleged that the defendants violated the
Arkansas Securities Act in several respects in connection with the public
offerings of securities made by United Arkansas Corporation ("UAC") (now known
as BNL Equity Corporation) during the period from January, 1989, until May,
1992.
This litigation has progressed slowly and no progress has been made in the area
of discovery into the substantive issues. On March 3, 1998, the plaintiffs filed
a Second Amended Class Action Complaint in which they dropped certain claims,
including allegations of common law fraud, fraudulent concealment, tolling of
the statute of limitations, and the request for punitive damages.
The first issue determined in the case concerned the procedural issue of whether
the lawsuit would be certified as a class action, with the class of plaintiffs
including all Arkansas purchasers who participated in the public offerings of
securities by UAC during the stated time frame. A hearing was held on the issue
of whether the class would be certified on June 8, 1998, and on August 27, 1998
the Court entered a ruling certifying the class. The Company believes that
serious errors were made in certifying the class, and the Company is in the
process of filing an appeal of the certification order.
The certification of the class does not have any impact on the substantive
issues to be litigated, including whether or not any material misrepresentations
or omissions were made in the offerings in question, whether the claims are
barred by the applicable statute of limitations, and other issues. If the effort
to certify the action as a class action had failed, the Company's potential
liability, if any, would have been limited to the named plaintiffs, Myra Jo
Pearson, Paul Pearson and James Stillwell. Since the class has been certified,
the potential liability, if any, extends to all members of the class.
The Company continues to believe strongly that the case is without merit.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto authorized.
BNL FINANCIAL CORPORATION
Date: 9/24/98 By: /s/ Barry N. Shamas
Barry N. Shamas
Executive Vice President
