MoneyGram 2009 Annual Report Download - page 125

Table of Contents
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Company recorded a $1.3 million liability and a $1.0 million receivable from the Company's insurance carriers, resulting in a net charge
of $0.3 million to the Consolidated Statements of Loss in 2009.
ERISA Class Action — On April 22, 2008, Delilah Morrison, on behalf of herself and all other MoneyGram 401(k) Plan participants,
brought an action in the United States District Court for the District of Minnesota. The complaint alleges claims under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including claims that the defendants breached fiduciary duties by
failing to manage the plan's investment in Company stock, and by continuing to offer Company stock as an investment option when the
stock was no longer a prudent investment. The complaint also alleges that defendants failed to provide complete and accurate information
regarding Company stock sufficient to advise plan participants of the risks involved with investing in Company stock and breached
fiduciary duties by failing to avoid conflicts of interests and to properly monitor the performance of plan fiduciaries and fiduciary
appointees. Finally, the complaint alleges that to the extent that the Company is not a fiduciary, it is liable for knowingly participating in
the fiduciary breaches as alleged. On August 7, 2008, plaintiff amended the complaint to add an additional plaintiff, name additional
defendants and additional allegations. For relief, the complaint seeks damages based on what the most profitable alternatives to Company
stock would have yielded, unspecified equitable relief, costs and attorneys' fees. On March 25, 2009, the Court granted in part and denied
in part defendants' motion to dismiss.
California Action — On January 22, 2008, Russell L. Berney filed a complaint in Los Angeles Superior Court against the Company and
its officers and directors, Thomas H. Lee Partners, L.P., and PropertyBridge, Inc. and two of its officers, alleging false and negligent
misrepresentation, violations of California securities laws and unfair business practices with regard to disclosure of the Company's
investments. The complaint also alleges derivative claims against the Company's Board of Directors relating to the Board's oversight of
disclosure of the Company's investments and with regard to the Company's negotiations with Thomas H. Lee Partners, L.P. and Euronet
Worldwide, Inc. The complaint seeks monetary damages, disgorgement, restitution or rescission of stock purchases, rescission of
agreements with third parties, constructive trust and declaratory and injunctive relief, as well as attorneys' fees and costs. In July 2008, an
amended complaint was filed asserting an additional claim for declaratory relief. In September 2009, an amended complaint was filed
alleging additional facts and naming additional defendants.
SEC Inquiry — By letter dated February 4, 2008, the Company received notice from the Securities and Exchange Commission ("SEC")
that it is conducting an informal, non-public inquiry relating to the Company's financial statements, reporting and disclosures related to
the Company's investment portfolio and offers and negotiations to sell the Company or its assets. The SEC's notice states that it has not
determined that any violations of the securities laws have occurred. On February 11, 2008 and November 5, 2008, the Company received
additional letters from the SEC requesting certain information. The Company cooperated with the SEC on a voluntary basis.
Other Matters — On September 25, 2009, the United States District Court for the Western District of Texas, Austin returned a jury
verdict in a patent suit brought against the Company by Western Union, awarding $16.5 million to Western Union. The Company has
appealed the verdict. In connection with its agreement with the Federal Trade Commission ("FTC"), the Company is making
enhancements to its consumer anti-fraud program and has paid $18.0 million into an FTC-administered fund to refund consumers who
have been victimized through third-party fraud. The Company is continuing to cooperate with a government entity in a separate matter
involving complaints that certain individuals or entities may have used our money transfer services for fraud-induced money transfers.
Credit Facilities — At December 31, 2009, the Company has overdraft facilities through its Senior Facility consisting of $15.5 million of
letters of credit to assist in the management of investments and the clearing of payment service obligations. All of these letters of credit
are outstanding as of December 31, 2009. These overdraft facilities reduce amounts available under the Senior Facility. Fees on the letters
of credit are paid in accordance with the terms of the Senior Facility described in Note 10 — Debt.
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