8th Feb 2007 11:00
NETeller PLC08 February 2007 NETELLER Works to Return Funds to US Customers After US Withdrawal NETELLER Plc (LSE: NLR), the leading global independent online money transferbusiness, today issued the following update with regard to its US business andcriminal charges against two of its founders. On 19 January 2007, at the request of the Group, the Group's legal advisers metwith representatives of the United States Attorney's Office for the SouthernDistrict of New York ("USAO") to clarify the Group's position with respect tothe complaints brought on 16 January 2007 against two of the Group's founders,Mr. Stephen Lawrence and Mr. John Lefebvre. Neither are current employees ordirectors of NETELLER. In that meeting, the Group pledged to cooperate with theUSAO, indicated it was prepared to begin document production promptly anddiscussed a potential mechanism for arranging an orderly repayment of funds toUS customers. The discussions between the Group's legal advisers and the USAO are ongoing. TheGroup is, under advice of its legal advisers, commencing production of documentsand intends to cooperate with the USAO in its investigation. Following upon the complaints dated 16 January 2007, banks in the US begandeclining to permit transactions involving the Group through accounts maintainedat one or more automated clearinghouses in the United States. Additionally, theGroup has been advised that the USAO has obtained court-ordered seizure warrantsseizing funds pertaining to the Group's transactions. To the best of the Group'sknowledge, it believes that the amount of funds seized by the USAO or otherwiserestricted by third parties does not exceed US $55 million. These funds werelargely in the process of being transferred from the Group to its US customersor vice versa. As a result of the restrictions placed by third parties, court-ordered seizures,and related legal concerns, the Group is currently unable to make payments to UScustomers. Nevertheless, the Group is in discussions with the USAO to manage anorderly return of funds to US customers. As part of these discussions, it iscontemplated that the USAO will engage a forensic accounting firm, at theGroup's expense, to assist in this process and to examine the Group's financialposition. "The return of funds to our US customers is a top priority forNETELLER" said Ron Martin, Group President and CEO. US customers wishing towithdraw funds from their NETELLER e-wallet accounts will experience ongoingdelays while these discussions continue, and a further update will be providedby the Group once effective repayment mechanisms are determined. To the Group's knowledge, no criminal action or proceeding has been broughtagainst the Group, its current officers or directors by the USAO. Nevertheless,there can be no assurance that the Group will not be charged in a criminalaction at some subsequent time. The Group intends to work with the USAO to seeka negotiated resolution of any allegations relating to its US activities. Anyresolution of this matter may lead to potential sanctions against the Groupincluding material financial penalties, fines and forfeitures. It is emphasized that in line with the Group's standard business practices forall customers, funds held by the Group for US customers are held in segregatedtrust accounts. The Group's own cash position remains strong and the Groupcurrently has sufficient working capital to fund all its customers' balances aswell as ongoing requirements of the business. NETELLER remains committed to developing its business in line with its statedstrategic objectives including geographical and product diversification for allmarkets. The Group will focus on its continuing business and the opportunitiesavailable in the growing markets of Europe, Asia and the Americas outside of theUnited States. Since the Group's withdrawal from the US market on 18 January2007, average daily new account sign-ups of new customers from non-US marketshas been around 1,400. This compares to average daily sign ups of 3,303 for theyear to 31 December 2006. Daily fee revenue since 18 January 2007 has averagedover US$ 200,000 per day (excluding any revenues from Netbanx, 1-Pay andinterest income). These metrics demonstrate the resilience of the Group'songoing business. NETELLER customers not resident in the US continue to beminimally affected by this withdrawal from the US market. In view of the continuing uncertainty, the Group's shares will continue to besuspended from trading on AIM for the time being. Further announcements will bemade as appropriate. Enquiries: Citigate Dewe Rogerson + 44 (0) 207 638 9571Sarah Gestetner/Sebastian Hoyle/George Cazenove About the NETELLER Group Trusted by millions of consumers in over 160 countries to move and managebillions of dollars each year, the NETELLER Group operates the largestindependent online money transfer business in the world. The Group specializesin providing innovative and instant payment services where money transfer isdifficult or risky due to identity, trust, currency exchange, or distance. Beingindependent has allowed the Group to support thousands of retailers andmerchants in many geographies and across multiple industries. The NETELLER Group is comprised of NETELLER Plc, its subsidiaries and associatedcompanies. The Group is quoted on the London Stock Exchange's AIM market, with aticker symbol of NLR. NETELLER (UK) Limited is authorised by the FinancialServices Authority (FSA) to operate as a regulated e-money issuer. For moreinformation about the Group visit www.netellergroup.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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