February 03, 2021

MONTH-IN-BRIEF: Corporations, LLCs & Partnerships

Tarik Haskins, Mark D. Hobson

Corporate Law

MoneyGram Ducks Caremark Claim Despite “Feckless Oversight” of Wire Transfer Operations

By Sara F. Kirkpatrick, K&L Gates

Recently, in Richardson v. Clark, the Delaware Court of Chancery dismissed fiduciary duty claims brought under a Caremark theory of liability, arising from MoneyGram International’s alleged failure to comply with federal anti-money-laundering (AML) requirements, resulting in MoneyGram paying total fines of $225 million. In 2012, MoneyGram entered into a deferred prosecution agreement with federal prosecutors (DPA), made a $100 million restitution payment and implemented measures to prevent future wire fraud and money laundering, including by: (i) creating an internal compliance and ethics committee responsible for ensuring DPA compliance, as well as hiring an independent compliance monitor, (ii) implementing worldwide policies designed to ensure compliance with AML standards, and (iii) dis-incentivizing executives from contributing to compliance failures. The DPA was extended to 2021 due to continued alleged violations of AML laws, and MoneyGram payed an additional $125 million in restitution.

In this action, the plaintiff alleged that the MoneyGram directors acted in bad faith by ignoring red flags and failing to exercise the oversight needed to comply with the DPA. The complaint pointed to several purported “red flags” that suggested MoneyGram’s failure to comply with AML requirements, including federal orders, the DPA and various independent audit reports and recommendations received throughout the term of the DPA. However, the complaint also raised the actions taken by MoneyGram’s board of directors over a course of five years, during which MoneyGram implemented multiple practices and programs designed to adhere to AML laws. The Court dismissed the complaint, finding that, although MoneyGram did not satisfy its obligations under the DPA, the plaintiff failed to state a Caremark claim.

Tarik Haskins

Partner; Morris, Nichols, Arsht & Tunnell LLP

Tarik is a partner in the Commercial Law Counseling Group. His practice covers a range of commercial transactions including mergers and acquisitions, secured financings, joint ventures, and business counseling.

Mark D. Hobson is an experienced Securities, Transactional, and Corporate attorney licensed in Colorado and Florida, with offices in Coral Gables, Florida. Mark’s clients include private equity funds, sophisticated entrepreneurs and investors, sole proprietors and start-ups, small businesses and medium-sized business, broker-dealers, investment advisers, investment companies, and EB-5 Regional Centers, among others. Mark’s practice spans an array of industries and is limited to transactional matters, M&A deals, private equity and venture capital funds, the offer and sale of Securities or Commodities under Federal law, State blue-sky laws, serving as outside general counsel and expert witness, corporate governance, UCC Article 9 secured-lending matters, joint ventures, distributorship and other sales arrangements.  Although Mark is currently a sole practitioner, he frequently works with third-party specialists to assist clients, as needed.  After starting his legal career in São Paulo, Brazil, Mark relocated to Miami where he practiced for 12 years in the corporate department of Shutts & Bowen, LLP, the oldest law firm in Miami, before working almost 4 years with a boutique law firm on Brickell Avenue, the heart of Miami’s financial district. In July 2014, Mark opened up HOBSON FIRM.