MoneyGram Intl. (MGI) Stock Fraud
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In conjunction with our partner lawyers, we are currently investigating claims for MoneyGram Intl. shareholders who purchased shares of MoneyGram Intl. and lost money on their investment as a result of the Company's recent announcements.
Our investigation revolves around whether MoneyGram Intl. and certain of the Company's officers and directors made a series of materially false and misleading statements related to the Company's business and operations in violation of the Securities Exchange Act of 1934 (the ``Exchange Act''). Recent corrective disclosures have caused the price of shares of MoneyGram Intl. to fall precipitously.
Our Experienced Stock Fraud Lawyers and Attorneys Have Years of Experience Representing Shareholders in Numerous Stock Fraud Cases.
On January 15, 2008, shares of the MoneyGram Intl. lost over half of their value, closing at $6.15 per share after MoneyGram Intl. announced they would be forced to enter a bailout agreement in order to finance its losses related to its holdings of sub-prime mortgage securities and collateralized debt obligations. MoneyGram shares traded as high as $30.85 in the 52 weeks prior to the announcement.
MoneyGram Intl. had been battered by the home mortgage crisis because it held a lot of securities backed by subprime mortgages. The company was forced to sell about $1.8 billion of its portfolio securities at a loss of $380 million. MoneyGram Intl. said at that time that the losses could increase when it sells another $1.9 billion of the securities.
MoneyGram Intl. announced in January it was negotiating with private-equity firm Thomas H. Lee Partners for a recapitalization of as much as $850 million in cash and as much as $750 million in new debt, which would give the buyout firm a 60% to 65% stake in the company. MoneyGram also revalued its portfolio to reflect unrealized losses of $860 million through the first 11 months of last year, not counting another $100 million in realized losses from recent securities sales.
According to an article on SmartMoney.com, MoneyGram strayed much further from its core area of expertise, and then failed to heed the warning signs in time. "You really have to be very disappointed in management," a Morningstar analyst told SmartMoney. "There were plenty of opportunities along the way where they could have sold these securities, cut their losses and admitted a mistake. Instead, they let situation develop to this point and created massive shareholder value destruction."
The MoneyGram bailout was also likely to hurt shareholders. Shares of MoneyGram stock are likely to be diluted, and MoneyGram once owned 100% of a $1 billion company would own just 35% to 40% of the company under the bailout plant.
If you are a MoneyGram shareholder who purchased or acquired shares between April 18, 2007 and January 14, 2008, you have valuable legal rights. Please contact one of the MoneyGram stock fraud lawyers at our firm by filling out our online form or calling 1-800-LAW INFO (1-800-529-4636).