Investor Revolt at Medallion Financial Over Governance and Tech Lag

MINNEAPOLIS, MN – May 19, 2026 – Medallion Financial Corp. (NASDAQ: MFIN) is embroiled in a fierce proxy battle as one of its largest shareholders, BIMIZCI Fund LLC, launches an aggressive campaign to overhaul the company’s board of directors. The activist investor, which holds over 500,000 shares, is urging stockholders to vote for its three independent director nominees at the upcoming June 9 annual meeting, citing a cascade of concerns ranging from deteriorating financial performance and poor corporate governance to a technology stack it likens to “a Motorola flip phone competing against an iPhone.”

The campaign, branded “Restore the Shine,” represents a significant challenge to the leadership of the Murstein family, which has long controlled the specialty finance company. BIMIZCI, an investment firm that says it has never before engaged in activism, claims years of attempts to work constructively with Medallion’s management were rebuffed, leaving it with “no choice” but to take its case directly to shareholders.

At the heart of the dispute is BIMIZCI’s assertion that Medallion’s board is failing to hold management accountable, leading to significant value destruction for investors. The fund is asking shareholders to vote the BLUE proxy card for its slate of nominees: Eric Kelly, John Kiernan, and Tim Shanahan, who bring a mix of public-board experience in technology, banking, and corporate turnarounds.

A Crisis of Accountability

Central to BIMIZCI’s case is the board’s handling of a federal securities fraud judgment against Andrew Murstein, the company’s President and newly appointed CEO. In May 2025, Medallion Financial and Murstein entered into final consent judgments with the Securities and Exchange Commission to settle charges of engaging in fraudulent schemes to illegally boost the company's stock price. The SEC had alleged Murstein engaged in illegal touting and fraudulently inflated the value of a key subsidiary. While neither Medallion nor Murstein admitted to the allegations, the company paid a $3 million penalty and Murstein paid a $1 million penalty.

BIMIZCI points out that just five months after the judgment, the board, which includes Andrew Murstein’s father, Alvin Murstein, promoted Andrew to CEO and awarded him a $4.6 million bonus. The activist investor claims the board never conducted its own investigation into the matter. “The board is not holding themselves or management accountable, which is hurting stockholders,” BIMIZCI stated in its definitive proxy statement.

Further fueling governance concerns are the board’s demographics and structure. BIMIZCI highlights that the average age of the board is 76, with five of eight directors over the age of 80. The investor argues this composition lacks the modern expertise necessary to navigate the competitive fintech landscape. BIMIZCI also criticizes what it calls “stockholder-unfriendly” rules, such as a requirement for a 75% supermajority vote to amend corporate bylaws—a nearly impossible threshold given insider ownership—and lucrative “change-in-control” payouts for executives, which could total over $20 million.

The 'Flip Phone' of Finance

Beyond governance, BIMIZCI has launched a scathing critique of Medallion’s technological capabilities. The comparison of the company’s tech stack to a “Motorola flip phone” underscores the investor’s belief that Medallion is woefully unprepared for a financial world dominated by artificial intelligence, digital-first loan origination, and nimble fintech competitors. In an era where AI-driven underwriting and hyper-personalized digital experiences are becoming industry standards, BIMIZCI argues Medallion is falling dangerously behind.

To address this, the activist has nominated directors with deep technology and modern finance credentials. Nominee Eric Kelly is the chairman of an AI software company and sits on the technology and audit committees of Sabre Corporation. John Kiernan, a former investment banker, is the current CEO of Alico, Inc. and previously served on the board of a NASDAQ-listed community bank. The third nominee, Timothy Shanahan, is a turnaround specialist with experience as a global CFO.

BIMIZCI’s plan includes pushing for a technology audit and a strategic review to modernize Medallion’s operations. The firm also aims to mend what it sees as damaged regulatory relationships, a potential reference to a recent disclosure by Medallion. On April 3, 2026, the company filed a report disclosing a default on $73.5 million of debentures after the Small Business Administration (SBA) cited a lack of a “qualified management team” at its small business investment company subsidiary.

Performance Under Pressure

The activist campaign is unfolding against a backdrop of concerning financial metrics. Medallion’s net income for the first quarter of 2026 plummeted to $5.0 million, down from $12.0 million in the same period last year. BIMIZCI notes this was the company's lowest quarterly earnings since the third quarter of 2020.

Credit quality has also come under scrutiny. The activist highlights that consumer loan charge-offs are at 15-year highs and that 20% of the commercial loan portfolio was non-performing at the end of fiscal year 2025. While the company’s net interest income grew slightly in the first quarter, it was outpaced by a 7.7% increase in operating expenses. This financial picture, combined with a valuation that sees Medallion trading at a significant discount to its peers on a price-to-tangible-book-value basis, forms the quantitative backbone of BIMIZCI’s argument for urgent change.

As the June 9 meeting approaches, Medallion Financial shareholders face a critical decision. They must weigh the incumbent board’s defense of its strategy against the activist’s stark warnings of technological obsolescence and a crisis of governance, determining who is best equipped to steer the company into an increasingly competitive future.