MoneyGram International, Inc. (MGI) Officers and Directors Accused of Breaching Fiduciary Duties
According to the complaint for breaches of fiduciary duty from February 2014 through the present, MoneyGram regularly and publicly boasted about its compliance and anti-fraud programs. However, in reality, MoneyGram was aware of high levels of fraud involving its money transfer system, but failed to put adequate anti-fraud countermeasures in place because doing so would negatively impact its revenue. Furthermore, officers and directors caused Moneygram to initiate repurchases of its common stock at artificially inflated prices. In total, Moneygram overpaid an aggregate amount of approximately $21.6 million for the repurchases. On November 8, 2018, the Federal Trade Commission (“FTC”) announced that MoneyGram had agreed to pay $125 million to settle allegations that (1) MoneyGram violated the FTC’s 2009 order requiring the company to implement a comprehensive anti-fraud program, and (2) that MoneyGram breached a 2012 Department of Justice Deferred Prosecution Agreement concerning the company’s anti-fraud programs. Moneygram officers and directors failed to maintain internal controls. Moneygram stock now trades significantly lower than prior to the alleged wrongdoing.