MoneyGram International, Inc. - Securities Class Action

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Copyright (c) 2001
Stanford Law School

MoneyGram International, Inc. Summary: The original complaint charges MoneyGram and certain of its officers and directors with violations of the Securities Exchange Act of 1934. MoneyGram, through its subsidiaries, provides payment services in the United States, as well as through a network of retail agents in North America, Latin America, western Europe, eastern Europe, Africa, India, Asia Pacific, and the Middle East.

The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results related to its investments. As a result of defendants’ false statements, MoneyGram stock traded at artificially inflated prices during the Class Period, trading in the 30 per share range during most of the Class Period.

On January 14, 2008, the Company announced that it had completed a valuation of its investment portfolio and had experienced additional net unrealized losses of $571 million as of September 30, 2007, bringing its cumulative net unrealized losses to $860 million. In addition, the Company announced it had needed to obtain amendments and waivers under its credit agreements. On this news, MoneyGram’s stock declined to as low as $5.66 per share before closing at $6.15 per share on January 15, 2008, on volume of 19 million shares, a one-day decline of 50%.

Later, on March 25, 2008, the Company publicly disclosed that the SEC had launched an investigation into its financial statements, reporting and disclosures related to its investment portfolio.

According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company lacked requisite internal controls to ensure that the reserves for the Company’s investments in asset-backed securities were adequate, and, as a result, the Company’s projections and reported results issued during the Class Period were based upon defective assumptions and/or manipulated facts; and (b) the Company concealed the extent of its potential losses arising from its exposure to asset-backed securities containing uncollectible debt.

According to the Company’s Form 10-Q for the Quarterly Period Ended June 30, 2009, the Company and certain of its officers and directors are parties to a consolidated class action case in the United States District Court for the District of Minnesota captioned In re MoneyGram International, Inc. Securities Litigation. The Consolidated Complaint was filed on October 3, 2008, and alleges against each defendant violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 under the Exchange Act and alleges against Company officers violations of Section 20(a) of the Exchange Act. The Consolidated Complaint alleges failure to adequately disclose, in a timely manner, the nature and risks of the Company’s investments, as well as unrealized losses and other-than-temporary impairments related to certain of the Company’s investments. The complainant seeks recovery of losses incurred by stockholder class members in connection with their purchases of the Company’s securities. On May 20, 2009, the Court granted in part and denied in part defendants’ motion to dismiss.

On June 30, 2009, the lead plaintiff filed a motion to certify the class. The parties engaged in discovered proceedings.

According to a press release dated February 25, 2010, MoneyGram International (NYSE:MGI), a global leader in the payment services industry, entered into memoranda of understanding to settle federal securities class and stockholder derivative actions pending in the United States District Court for the District of Minnesota. The claims arise out of the subprime related losses in 2007 and 2008. … Under terms of the securities class action memorandum of understanding, the plaintiffs agree in principle to settle the claims for an $80 million cash payment, all but $20 million of which will be paid by the Company’s insurance coverage. The derivative claims memorandum of understanding provides for changes to MoneyGram’s business, corporate governance and internal controls, some of which have already been implemented in whole or in part in connection with MoneyGram’s recent recapitalization. The memoranda of understanding are subject to negotiation and execution of definitive settlement documents containing usual and customary settlement agreement terms, notice to the class and shareholders, and approval of the Court.

On March 9, 2010, the lead plaintiff filed a motion for preliminary approval of the proposed class action settlement. The motion was approved the following day. On June 21, 2010, Judge David S. Doty approved the settlement and the action was dismissed with prejudice. The Court also awarded attorney's fees and expenses in the amount of $1,250,000.00.

INDUSTRY CLASSIFICATION:
SIC Code: 7389
Sector: Financial
Industry: Misc. Financial Services

COMPANY/ISSUER NAME:	MoneyGram International, Inc.
COMPANY/ISSUER TICKER:	MGI
COMPANY WEBSITE:	http://www.moneygram.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

City of Ann Arbor Employees' Retirement System, et al. v. MoneyGram International, Inc., et al.

COURT: D. Minnesota	DOCKET NUMBER: 08-CV-00883
JUDGE NAME: Hon. Ann D. Montgomery
DATE FILED: 03/28/2008	SOURCE: Notice of Filing
CLASS PERIOD START: 01/24/2007	CLASS PERIOD END: 01/14/2008
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Coughlin Stoia Geller Rudman & Robbins LLP (Melville) 58 South Service Road, Suite 200, Melville, NY, 11747 (voice) 631.367.7100, (fax) 631.367.1173, info@csgrr.com/ Coughlin Stoia Geller Rudman & Robbins LLP (San Diego) 655 West Broadway, Suite 1900, San Diego, CA, 92101 (voice) 619.231.1058, (fax) 619.231.7423, info@csgrr.com/ Zimmerman Reed, PLLP 651 Nicollet Mall, Suite 501, Minneapolis, MN, 55402 (voice) 612.341.0400, (fax) 612.341.0844, info@zimmreed.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 3

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint for Violations of theFederal Securities Laws - Demand for Jury Trial
Type: Complaint		Date on the document: 03/28/2008
Order Consolidated The Action, Appointing Lead Plaintiff, And Approving Selection Of Counsel
Type: Order Appointing LP/LC		Date on the document: 07/22/2008

REFERENCE COMPLAINT

In Re: MoneyGram International, Inc. Securities Litigation

COURT: D. Minnesota	DOCKET NUMBER: 08-CV-00883
JUDGE NAME: Hon. Judge David S. Doty
DATE FILED: 10/03/2008	SOURCE: Docket
CLASS PERIOD START: 01/24/2007	CLASS PERIOD END: 01/14/2008
TYPE OF COMPLAINT: First Consolidated
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Nix Patterson & Roach, LLP 205 Linda Drive, Daingerfield, TX, 75638 (voice) 903.645.7333, (fax) , _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 1

DOCUMENTS FOR THE REFERENCE COMPLAINT
Consolidated Class Action Complaint for Violations of the Federal Securities Laws
Type: Complaint		Date on the document: 10/03/2008
Order
Type: Order		Date on the document: 05/20/2009
Stipulation And Agreement Of Settlement
Type: Settlement		Date on the document: 03/09/2010
Order Preliminarily Approving Settlement, Directing Notice And Scheduling Hearing Date
Type: Order		Date on the document: 03/10/2010
Order Preliminarily Approving Settlement, Approving Notice And Scheduling Settlement Hearing
Type: Order		Date on the document: 04/01/2010
Final Order and Judgment
Type: Order		Date on the document: 06/18/2010
Final Order and Judgment
Type: Order		Date on the document: 06/21/2010
Judgment in a Civil Case
Type: Other		Date on the document: 06/24/2010
Judgment in a Civil Case
Type: Other		Date on the document: 06/24/2010
U.S. District Court Civil Docket
Type: Docket		Date on the document: 07/09/2010

OTHER DOCUMENTS
Class Action Complaint for Violation of Federal Securities Laws - Demand for Jury Trial
Case Name and/or Number: Edward J. Goodman Life Income Trust, et al. v. MoneyGram International, Inc., et al.
Type: Complaint		Date on the document: 04/04/2008
Class Action Complaint - Demand for Jury Trial
Case Name and/or Number: Manzor Hussain, et al. v. MoneyGram International, Inc., et al.
Type: Complaint		Date on the document: 04/10/2008
Class Action Complaint - Jury Trial Demanded
Case Name and/or Number: Willie R. Pittman, et al. v. MoneyGram International, Inc., et al.
Type: Complaint		Date on the document: 04/10/2008

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