MoneyGram 2007 Annual Report Download - page 18

Table of Contents
Notwithstanding the realignment of our investment portfolio, fluctuations in interest rates will affect the value and amount of revenue
produced by our investment portfolio, the amount of commissions that we pay and the amount we pay or receive under our swap
agreements. There can be no assurance that we will be able to successfully manage interest rate exposure through the use of swaps or
other arrangements or that interest rate fluctuation in our investments will align with the commission rates we pay to our official check
customers.
Litigation or investigations involving MoneyGram or our agents, which could result in material settlements, fines or penalties, may
adversely affect our business, financial condition and results of operations.
We have received a notice from the SEC that it is conducting an informal, non-public inquiry of our financial statements, reporting and
disclosures related to our investment portfolio and offers and negotiations to sell the Company or our assets. While the SEC's notice
states that it has not determined that any violations of the securities laws have occurred, there can be no assurance of the outcome of the
investigation. We are also currently the subject of stockholder litigation. While we believe the suits are without merit and intend to
vigorously defend against such claims, the outcome of the lawsuits cannot be predicted at this time. The cost to defend the SEC inquiry
and the stockholder litigation could be substantial, regardless of the outcome.
Regulatory and judicial proceedings, including risks associated with the SEC inquiry, our failure to comply with certain state regulatory
requirements for a brief period of time, and potential adverse developments in connection with ongoing stockholder litigation, may
adversely affect our business, financial condition and results of operations. There may also be adverse publicity associated with lawsuits
and investigations that could decrease agent and customer acceptance of our services.
Additionally, our business has been in the past, and may be in the future, the subject of class action lawsuits, regulatory actions and
investigations and other general litigation. The outcome of class action lawsuits, regulatory actions and investigations is difficult to assess
or quantify. Plaintiffs or regulatory agencies in these lawsuits, actions or investigations may seek recovery of very large or indeterminate
amounts, and the magnitude of these actions may remain unknown for substantial periods of time. The cost to defend or settle future
lawsuits or investigations may be significant.
An inability of our agents or for the Company to maintain adequate banking relationships may adversely affect our financial
condition.
Prior to the closing of the Capital Transaction, certain of our clearing and processing banks sought additional intra-day and other advance
funding from us. While we believe the Capital Transaction will restore more ordinary funding protocols, it is possible that clearing and
cash management banks will require advance funding or other security or even terminate their relationships with us. For the clearing of
certain items, such as money orders, we rely on two clearing banks and thus have limited alternative resources. We may experience
increased costs or significant disruption of our business if we should lose one of our existing clearing bank relationships.
We and our agents are considered Money Service Businesses, or "MSBs," in the United States under the Bank Secrecy Act. The federal
banking regulators are increasingly taking the stance that MSBs, as a class, are high risk. As a result, several financial institutions, which
look to the federal regulators for guidance, have terminated their banking relationships with some of our agents and one depository bank
has terminated its banking relationship with us. If agents are unable to maintain existing or establish new banking relationships, they may
not be able to continue to offer our services. Any inability on our part to maintain existing or establish new banking relationships could
adversely affect our business, results of operations and financial condition.
Loss of key employees could have a material adverse effect on our business, financial condition and results of operations.
Our success depends to a large extent upon the continued services of our executive management team and other key employees. The loss
of key personnel could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Additionally, there are no assurances that we will be able to attract or retain other skilled personnel in the future.
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