Discover Financial Services agreed to pay $775 million to Morgan Stanley to resolve a dispute over how to divide the proceeds of a legal settlement with Visa Inc. and MasterCard Inc., reports Bloomberg News.
Visa and MasterCard, the world’s biggest credit-card companies, announced in 2008 that they would pay $2.75 billion to Discover to settle an antitrust lawsuit claiming they blocked banks from issuing Discover cards.
Morgan Stanley, which spun off Discover in 2007, sued in state court in 2008 as part an effort to collect part of the settlement under a separation agreement between the two companies. Today’s settlement resolves that suit, Discover said in a regulatory filing.
Under the agreement with Morgan Stanley, Discover was to pay Morgan Stanley the first $700 million recovered. The bank was also to receive half of any settlement proceeds above $1.5 billion, up to a maximum of $1.5 billion, according to regulatory filings.
“We are delighted with the outcome,” said Mark Lake, a spokesman for Morgan Stanley in New York.
Discover, based in Riverwoods, Illinois, claimed Morgan Stanley had breached the separation agreement.
