Credit Card issuer Discover Financial Services (DFS) has agreed to pay its former parent Morgan Stanley $775 million to settle a dispute over sharing the gains from a legal settlement with Visa Inc and MasterCard Inc.
DFS, the issuer of Discover Card, the third-largest brand in the US, disclosed this settlement in a filing with the US Securities and Exchange Commission yesterday.
Discover had filed an antitrust lawsuit against Visa and MasterCard, the world's biggest credit-card companies, in 2004, alleging that they had prevented banks from issuing Discover cards.
Visa and MasterCard paid Discover $2.75 billion in 2008 in an out-of-court settlement.
New York-based Morgan Stanley, which had spun off Discover into an independent entity in 2007, went to court in 2008, claiming that it was entitled to $1.2 billion from that settlement under a separation agreement between it and Discover.
Riverwoods, Illinois-based Discover, however, refused to honour the separation agreement as it alleged that Morgan Stanley had breached the agreement by interfering and harming its case against Visa and MasterCard.