This is a securities fraud class action lawsuit against 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 class action complaint alleges that during the Class Period, MoneyGram issued materially false and misleading statements regarding MoneyGram'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, MoneyGram 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, MoneyGram 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, MoneyGram 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 MoneyGram but concealed from the investing public during the Class Period, were as follows:
(a) MoneyGram lacked requisite internal controls to ensure that the reserves for MoneyGram's investments in asset-backed securities were adequate, and, as a result, MoneyGram's projections and reported results issued during the Class Period were based upon defective assumptions and/or manipulated facts; and
(b) MoneyGram concealed the extent of its potential losses arising from its exposure to asset-backed securities containing uncollectible debt.
Name (Stock Symbol)
MoneyGram International, Inc. (MGI)
MoneyGram International, Inc., through its subsidiaries, provides payment services worldwide.
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