MoneyGram 2015 Annual Report Download - page 26

Table of Contents
Item 3. LEGAL PROCEEDINGS
The matters set forth below are subject to uncertainties and outcomes that are not predictable. The Company accrues for these matters as any resulting losses
become probable and can be reasonably estimated. Further, the Company maintains insurance coverage for many claims and litigation alleged.
Litigation Commenced Against the Company:
ClassActionSecuritiesLitigation- On April 15, 2015, a putative securities class action lawsuit was filed in the Superior Court of the State of Delaware, County of
New Castle, against MoneyGram, all of its directors, certain of its executive officers, THL, Goldman Sachs and the underwriters of the secondary public offering
of the Company’s common stock that closed on April 2, 2014 (the “2014 Offering”). The lawsuit was brought by the Iron Workers District Council of New
England Pension Fund seeking to represent a class consisting of all purchasers of the Company’s common stock pursuant and/or traceable to the Company’s
registration statement and prospectus, and all documents incorporated by reference therein, issued in connection with the 2014 Offering. The lawsuit alleges
violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended (the "Securities Act"), due to allegedly false and misleading statements in
connection with the 2014 Offering and seeks unspecified damages and other relief. On May 19, 2015, MoneyGram and the other defendants filed a notice of
removal to the federal district court of the District of Delaware. On June 18, 2015, the plaintiff filed a motion to remand the case back to Delaware State Court. The
Company believes that the claims are without merit and intends to vigorously defend against the lawsuit. The Company is unable to predict the outcome, or the
possible loss or range of loss, if any, related to this matter.
OtherMatters— The Company is involved in various other claims and litigation that arise from time to time in the ordinary course of the Company's business.
Management does not believe that after final disposition any of these matters is likely to have a material adverse impact on the Company's financial condition,
results of operations and cash flows.
Government Investigations:
State Civil Investigative Demands — MoneyGram has received Civil Investigative Demands from a working group of nine state attorneys general who have
initiated an investigation into whether the Company took adequate steps to prevent consumer fraud during the period from 2007 to 2014. On February 11, 2016, the
Company entered into a settlement agreement with 49 states and the District of Columbia to settle any civil or administrative claims such attorneys general may
have asserted under their consumer protection laws through the date of the settlement agreement in connection with the investigation. Under the settlement
agreement, the Company will make a payment of $13.0 million to the participating states to be used by the states to provide restitution to consumers. The Company
also agreed to implement certain enhancements to its compliance program and provide periodic reports to the states party to the settlement agreement. As of
December 31, 2015 , the Company has accrued $13.0 million in connection with the investigation.
OtherMatters— The Company is involved in various other government inquiries and other matters that arise from time to time. Management does not believe that
after final disposition any of these other matters is likely to have a material adverse impact on the Company’s financial condition, results of operations and cash
flows.
Actions Commenced by the Company:
TaxLitigation— The IRS completed its examination of the Company’s consolidated income tax returns through 2013, and issued Notices of Deficiency for 2005-
2007 and 2009 and an Examination Report for 2008. The Notices of Deficiency disallow, among other items, approximately $900 million of ordinary deductions
on securities losses in the 2007, 2008 and 2009 tax returns. In May 2012 and December 2012, the Company filed petitions in the U.S. Tax Court challenging the
2005-2007 and 2009 Notices of Deficiency, respectively. In 2013, the Company reached a partial settlement with the IRS allowing ordinary loss treatment on
$186.9 million of deductions in dispute. In January 2015, the U.S. Tax Court granted the IRS's motion for summary judgment upholding the remaining adjustments
in the Notices of Deficiency. During 2015 , the Company made payments to the IRS of $61.0 million for federal tax payments and associated interest related to the
matter. The Company believes that it has substantive tax law arguments in favor of its position and filed a notice of appeal with the U.S. Tax Court on July 27,
2015. The U.S. Tax Court has transferred jurisdiction over the case to the U.S. Court of Appeals for the Fifth Circuit.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
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