MoneyGram 2009 Annual Report Download - page 25

Table of Contents
other-than-temporary impairments related to certain of the Company's investments. The Consolidated Complaint seeks recovery of losses
incurred by stockholder class members in connection with their purchases of the Company's securities. On February 24, 2010, the parties
entered into a non-binding Memorandum of Understanding pursuant to which the parties agreed, subject to final approval of the parties
and the court, to settle this action for a cash payment of $80 million, all but $20 million of which would be paid by the Company's
insurance carriers. On March 9, 2010, the parties entered into a Settlement Agreement to settle the case on terms consistent with the
Memorandum of Understanding. On March 10, 2010, the Court issued an Order that preliminarily approved the settlement. The parties
will seek final approval of the settlement at a hearing currently set for June 18, 2010.
Minnesota Stockholder Derivative Claims — Certain of the Company's present and former officers and directors are defendants in a
consolidated shareholder derivative action in the United States District Court for the District of Minnesota captioned In re MoneyGram
International, Inc. Derivative Litigation. The Consolidated Complaint in this Action, which was filed on November 18, 2009 and arises
out of the same matters at issue in the securities class action, alleges claims on behalf of the Company for, among other things, breach of
fiduciary duties, unjust enrichment, abuse of control, and gross mismanagement. On February 24, 2010, the parties entered into a non-
binding Memorandum of Understanding pursuant to which they agreed, subject to final approval of the parties and the court, to settle this
action. The 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
Company also agreed to pay attorney fees and expenses to the plaintiff's counsel in the amount of $1.3 million, with $1.0 million to be
paid by the Company's insurance carriers. The Memorandum of Understanding is subject to negotiation and execution of definitive
settlement documents containing usual and customary settlement terms, notice to shareholders, and approval of the Court.
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
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