A class action securities case has been brought against Western Union Company (UW) by purchasers of the company’s publicly traded securities. The purchasers would have bought the securities between 2/24/12 and 1/19/17. The lead plaintiff is an institutional investor. The lawsuit is UA Local 13 Pension Fund v. The Western Union Company.
The lawsuit contends that Western Union and a number of its current and ex-directors and/or officers made false and misleading statements and did not disclose adverse information about Western Union’s business and compliance policies. Instead, Western Union and senior management purportedly told investors that the Company’s compliance program was robust and in compliance with the laws, both of which the plaintiff claims were false.
Western Union is accused of aiding and abetting a network of international criminal activities, not putting into place compliance programs that were effective, and disregarding misconduct so as to profit. The alleged violations purportedly caused Western Union shares to become artificially inflated.
Western Union Settles With DOJ, FTC for $586M
Last month, The Wall Street Journal reported that Western Union consented to pay $586M to resolve criminal and civil charges brought by the Justice Department and the Federal Trade Commission, respectively. The government accused the company of not effectively policing customers who may have been committing fraud.
According to the DOJ, Western Union did not put into place the “proper controls and discipline agents,” compliance polices were violated, and illegal activities, such as fraud, money laundering, and illegal gambling were able to occur as a result. Hundreds of millions of dollars in “prohibited transactions” reportedly took place.
Western Union agreed to a “deferred prosecution” deal with the DOJ in which prosecutors would defer and drop any criminal charges as long as the company enhanced its compliance program.
As part of the settlement, Western Union admitted to not keeping up an anti-money laundering program that was effective, which caused it to aid and abet wire fraudsters.
Separately, Western Union settled with 49 states and the District of Columbia for $5M over fraud-induced wire transfers. The settlement resolves a probe into the wiring of money for fraudulent purposes through the company’s wire transfer service.
Since 2001 a number of Western Union agents have been convicted for colluding with criminals to bilk individuals. In 2010, Western Union settled allegations of money-laundering-related deficiencies for $94M. Those claims were brought by four states.
Western Union to pay $586 million to victims of transfer scams, CBS MoneyWatch, January 19, 2017
State signs on to $5 million fraud settlement with Western Union, Deseret News, February 9, 2017
Western Union to pay $94 million in Ariz. settlement, The Denver Post/Bloomberg News, February 11, 2010