MoneyGram International, Inc. (MGI) Accused of Failing to Implement Adequate Anti-Fraud Programs
According to the complaint against the company’s officers and directors for alleged violations of the Securities Exchange Act of 1934 between February 11, 2014 and November 8, 2018, MoneyGram International, Inc. (MGI) boasted that the company had invested more than $120 million in its compliance and anti-fraud programs and had prevented more than $365 million in fraud losses. However, for over four years, 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. 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. When MoneyGram reported disappointing third quarter 2018 earnings the following day, the company’s stock lost nearly half its value, closing at $2.27 per share on November 9, 2018, and has since continued to fall.
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