The SEC lawsuit

In 2021, the SEC filed a federal lawsuit against Medallion Financial and Andrew Murstein — now the Company's CEO — alleging two fraudulent schemes. The first involved secretly paying people to post hundreds of promotional articles about Medallion stock online without disclosing they were being paid, a practice known as illegal "touting." When journalists exposed the scheme, the SEC alleged Mr. Murstein falsely denied knowledge of it and paid a promoter hush money to stay quiet. The second involved inflating the reported value of Medallion Bank by hundreds of millions of dollars — firing the independent valuation firm when it refused to certify his numbers, then offering a replacement firm future investment banking work in exchange for the valuation he needed. The result, the SEC alleged, was that Medallion's balance sheet overstated its assets by more than $140 million and stockholders' equity by more than $115 million. The relevant filings are available above.

On May 30, 2025, a federal judge entered a Final Judgment permanently enjoining both Medallion and Mr. Murstein from making false or misleading statements to investors and misleading the Company's auditors. Medallion paid a $3,000,000 civil penalty; Mr. Murstein is personally paying $1,000,000 in installments — money he cannot recover through insurance, indemnification, or a personal bankruptcy. Solely for purposes of nondischargeability in bankruptcy, Mr. Murstein agreed in writing that "the allegations in the Amended Complaint are true and admitted by Murstein." Neither Medallion nor Mr. Murstein may publicly deny or minimize the SEC's allegations under the terms of the settlement. The court also required Medallion to hire an Independent Compliance Consultant and create a new Chief Compliance Officer reporting to the Board's Audit Committee — both of which remain in effect today under continuing federal court jurisdiction.

Less than eight months after a federal court permanently enjoined him for securities violations at this same company, Mr. Murstein was appointed CEO — without a stockholder vote and without any public explanation of how the Board evaluated his fitness. He now oversees the same investor communications, financial reporting, and auditor relationships that were the subject of the SEC's findings. Every statement he makes to investors — on earnings calls, in stockholder letters, or in direct conversations — occurs under a court order that prohibits him from minimizing what happened and exposes him to contempt proceedings if he violates it. That order extends to everyone acting on Medallion's behalf, including the Board and its proxy solicitation agents. The conflict is structural, documented, and of the Board's own making: it chose to install Mr. Murstein as CEO without stockholder input while simultaneously adopting bylaw amendments that make Board accountability harder to achieve. Stockholders should weigh that choice carefully when evaluating everything they hear from Medallion in connection with this year's annual meeting.