For Immediate Release                                  99-75


      W. R. Grace & Co. and Outside Auditors Settle SEC
                         Proceedings
                              
     Washington, DC, June 30, 1999 -- The Securities and
Exchange Commission announced today that it instituted and
simultaneously settled public administrative and cease-and-
desist proceedings against W. R. Grace & Co. in which the
Commission found that Grace, through former members of its
senior management, misled investors from 1991 to 1995 by
manipulating the reported income and growth rates of Grace
and its Health Care Group.  In addition to ordering that
Grace cease and desist from further violations of the
securities laws, the Commission accepted an undertaking by
Grace to establish a $1 million fund to further awareness
and education relating to financial reporting.  In
connection with the entry of the Grace order, the Commission
agreed voluntarily to dismiss with prejudice the civil
injunctive action it has pending against Grace in the United
States District Court for the Southern District of Florida.

     The Commission also instituted and simultaneously
settled administrative and cease-and-desist proceedings
against two partners of PricewaterhouseCoopers LLP who
participated in the audits of Grace's consolidated financial
statements.

     Richard H. Walker, Director of the Commission's
Division of Enforcement, said, "Accurate financial reporting
is the cornerstone of our capital markets.  This case makes
plain that we will not tolerate efforts to play fast and
loose with the accounting rules to meet earnings targets."

     The Commission found that from 1991 to 1995, Grace,
through former senior management of Grace and its former
subsidiary, National Medical Care, Inc. (NMC), used excess
reserves, that were not established or maintained in
conformity with Generally Accepted Accounting Principles
(GAAP), to bring the reported earnings of the Grace's Health
Care Group in line with Grace's targets.  In general, from
1991 through the first quarter of 1995, Grace, through
former Grace and NMC management, reported earnings growth
rates for its Health Care Group that were relatively steady
whereas the actual growth rates fluctuated from about an 8%
decline to a 61% increase.  The amount of the excess
reserves fluctuated during the relevant period but ranged to
over $60 million.

     The Commission also found that from 1991 to 1995,
former Grace and NMC senior management discussed the excess
reserves with Grace's independent auditors.  Eugene F.
Gaughan was the engagement partner on the audits of Grace's
consolidated financial statements during fiscal years 1991 -
1994.  Thomas J. Scanlon was the concurring partner on the
1991 and 1992 audits of Grace's consolidated financial
statements and was the engagement partner on the 1995 audit.
During 1991 - 1995, the independent auditors issued "clean"
audit reports.

     The Commission found that beginning in 1991, Gaughan
and Scanlon became aware of the excess reserves and their
purpose.  Gaughan and Scanlon should have, but did not,
conclude that Grace had to eliminate the excess reserves in
order for the auditors to issue an unqualified audit report
and they should have, but did not, discuss or require the
discussion of the purpose of the excess reserves with
Grace's Audit Committee.  The Commission also found that
Gaughan and Scanlon failed to comply with other relevant
auditing standards.

     In addition to finding that Grace violated the
antifraud provisions of the Securities Exchange Act of 1934
(Exchange Act), the Commission also found that Grace
violated the Exchange Act's reporting, recordkeeping, and
internal control provisions.  Furthermore, in separate
orders, the Commission found that both Gaughan and Scanlon
failed to comply with certain auditing standards and were
each a cause of Grace's violations of the reporting,
recordkeeping, and internal control provisions of the
Exchange Act.

     Without admitting or denying the Commission's findings,
Grace consented to the entry of an order that it cease-and-
desist from committing or causing any violation of the
antifraud, reporting, recordkeeping, and internal control
provisions of the Exchange Act.  Grace also agreed to fund
the $1 million educational fund described above.

     Also without admitting or denying the Commission's
findings, Gaughan and Scanlon each consented to the entry of
an order finding that they failed to comply with certain
auditing standards, that they were each a cause of Grace's
violations of the reporting, recordkeeping, and internal
control provisions of the Exchange Act, and that they cease-
and-desist from causing future such violations.

See also:  Administrative Proceeding 34-40819
           Litigation Release 16008

Contact:   David Nelson (305) 982-6339 or
           Glenn Gordon (305) 982-6360


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