Rising geopolitical tensions are having an impact across a wide variety of issues, including, in particular, issues having to do with the cross-border movement of people. These issues include changes within respect to immigration and visa policies. These changes not only affect the individuals involved but also companies whose business operations are connected in some way to immigration and visa issues. A recently filed securities lawsuit against a company whose money transfer business is directly linked to the cross-border movement of students for education and study shows not only how changing visa policies, for example, can not only affect companies’ operations and financial results but can also translate into securities litigation.

Background

Flywire operates a payments-enablement platform, facilitating payments between clients and payees in a variety of industries. The company’s largest industry focus is on education. The volume of the company’s business and its revenues rely on international enrollments. Because of the importance of the sector to the company’s performance, its education business is of particular importance to investors and analysts.

In January 2024, Canada announced intake caps on international student permit applications, resulting in a reduction in the number of international students coming to Canada, and, in turn, in a reduction in payment flows, with an adverse effect on Flywire’s business. Similarly, in 2023, Australia tightened international student visa rules, which has also had an adverse impact on the company’s business.

Notwithstanding these development affecting the cross-border movement of students for education and study, the subsequently filed securities suits alleges, the company “consistently touted the sustainability of Flywire’s revenue growth and financial condition, while downplaying the anticipated negative impacts of permit- and visa-related headwinds on the Company’s business.”

On February 25, 2025, when the company announced its fourth quarter and full year 2025 results, the company reported an operating loss, which the company’s CEO blamed on “a complex macro environment with significant headwind.” In a conference call the same day, the company disclosed that the company’s business in the education sector had significantly deteriorated due to worsening permit and visa-related headwinds, including “double digit declines in student visa issuance in our big four geographic markets,” with “continued visa policy restrictions” anticipated in 2025. Among other things, company officials cited anticipated revenue declines due to “recent policy changes” and “new visa rules that are starting to affect demand.”

According to the securities lawsuit complaint, the company’s shares declined nearly 38% on this news.

The Lawsuit

On July 25, 2025, a plaintiff shareholder filed a securities class action lawsuit in the Eastern District of New York against Flywire and certain of its directors and officers. The complaint purports to be filed on behalf of investors who purchased the company’s securities between February 28, 2024, and February 25, 2025.

The complaint alleges that during the class period, the defendants failed to disclose that: “(i) the strength and sustainability of Flywire’s revenue growth was overstated; (ii) the negative impact that permit and visa-related restrictions were having and were likely to have on Flywire’s business was understated; and (iii) as a result, Defendants’ public statements were materially false and misleading at all relevant times.”

The plaintiff alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the class.

Discussion

Geopolitical tensions in 2025 – driven by conflicts, rising nationalism, and shifting alliances — are significantly reshaping government practices and policies in a number of different areas. One area in particular that these changes are affecting is global mobility. These developments and the resulting changes in the cross-border movement of people can have a significant impact on business operations and financial results, as this case illustrates. And as this case shows, these developments and the associated risks can translate into securities litigation.

I have long thought that the geopolitical risk potentially represents an important and growing potential source of director and officer liability. Developments in a number of different areas, such as, for example, with respect to tariffs and trade sanctions, present companies with significant levels of risk of a kind that can not only affect financial results but can also lead to D&O claims. In prior posts (for example, here and here), I have noted earlier cases in which geopolitical developments have led to securities class action lawsuit filings. As this case shows, changes to immigration and visa policies as a result of geopolitical tensions can not only pose challenges for at least some companies, but at least potentially can lead to securities litigation.

These developments have significant implications for D&O insurance underwriters. Along with key underwriting factors such as financial performance and business stability, underwriters must be prepared to assess how the changing geopolitical environment might affect that company and its operations. Companies’ susceptibility to changing governmental policies and practices may represent a new area of underwriting analysis, but as this case shows, this kind of susceptibility may become more important in an increasingly fraught world.