Western Union 2015 Annual Report Download - page 152

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Shareholder Actions
On December 10, 2013, City of Taylor Police and Fire Retirement System filed a purported class action complaint in the
United States District Court for the District of Colorado against The Western Union Company, its President and Chief Executive
Officer and a former executive officer of the Company, asserting claims under sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 (“Exchange Act”) and Securities and Exchange Commission rule 10b-5 against all defendants. On September 26,
2014, the Court appointed SEB Asset Management S.A. and SEB Investment Management AB as lead plaintiffs. On October 27,
2014, lead plaintiffs filed a consolidated amended class action complaint, which asserts the same claims as the original complaint,
except that it brings the claims under section 20(a) of the Exchange Act only against the individual defendants. The consolidated
amended complaint also adds as a defendant another former executive officer of the Company. The consolidated amended complaint
alleges that, during the purported class period, February 7, 2012 through October 30, 2012, defendants made false or misleading
statements or failed to disclose adverse material facts known to them, including those regarding: (1) the competitive advantage
the Company derived from its compliance program; (2) the Company’s ability to increase market share, make limited price
adjustments and withstand competitive pressures; (3) the effect of compliance measures under the Southwest Border Agreement
on agent retention and business in Mexico; and (4) the Company’s progress in implementing an anti-money laundering program
for the Southwest Border Area. On December 11, 2014, the defendants filed a motion to dismiss the consolidated amended
complaint. The Court referred the motion to a Magistrate Judge, who, on April 14, 2015, issued a report and recommendation,
which recommended that the defendants’ motion to dismiss be granted and that the consolidated amended complaint be dismissed
in full. On April 28, 2015, plaintiffs filed objections to the report and recommendation. On September 29, 2015, the Court (a)
overruled in part and sustained in part plaintiffs’ objections to the report and recommendation; (b) adopted in part the
recommendation; (c) granted in part and denied in part defendants’ motion to dismiss the consolidated amended complaint; and
(d) dismissed the claims against one of the individual defendants and denied the motion as to the remaining defendants. In particular,
the Court denied the motion to dismiss as to certain statements made by the Company’s President and Chief Executive Officer
and a former executive officer during an investor conference call on July 24, 2012, related to category (3) above concerning the
effect of compliance measures under the Southwest Border Agreement on agent retention and business in Mexico. On November
3, 2015, defendants filed an answer to the consolidated amended complaint. On February 5, 2016, plaintiffs notified the Court
that a witness on whom they had relied in bringing their claims did not have firsthand knowledge of events occurring at Western
Union during calendar year 2012, and that without the witness’ support of their claims the consolidated amended complaint would
not have survived the defendants’ motion to dismiss. The same day, plaintiffs voluntarily dismissed the consolidated amended
complaint with prejudice.
On January 13, 2014, Natalie Gordon served the Company with a Verified Shareholder Derivative Complaint and Jury Demand
that was filed in District Court, Douglas County, Colorado naming the Company’s President and Chief Executive Officer, one of
its former executive officers, one of its former directors, and all but one of its current directors as individual defendants, and the
Company as a nominal defendant. The complaint asserts claims for breach of fiduciary duty and gross mismanagement against
all of the individual defendants and unjust enrichment against the President and Chief Executive Officer and the former executive
officer based on allegations that between February 12, 2012 to October 30, 2012, the individual defendants made or caused the
Company to issue false and misleading statements or failed to make adequate disclosures regarding the effects of the Southwest
Border Agreement, including regarding the anticipated costs of compliance with the Southwest Border Agreement, potential effects
on business operations, and Company projections. Plaintiff also alleges that the individual defendants caused or allowed the
Company to lack requisite internal controls, caused or allowed financial statements to be misstated, and caused the Company to
be subject to the costs, expenses and liabilities associated with the City of Taylor Police and Fire Retirement System lawsuit.
Plaintiff further alleges that the Company’s President and Chief Executive Officer and the former executive officer received
excessive compensation based on the allegedly inaccurate financial statements. On March 12, 2014, the Court entered an order
granting the parties' joint motion to stay proceedings in the case during the pendency of certain of the shareholder derivative actions
described below.
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