NEW YORK, Nov. 08, 2023 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, is investigating potential claims against Discover Financial Services (NYSE: DFS) on behalf of long-term stockholders following a class action complaint that was filed against DFS on September 1, 2023 with a Class Period from February 21, 2019 and August 14, 2023. Our investigation concerns whether the board of directors of DFS have breached their fiduciary duties to the company.
According to the complaint, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) DFS maintained deficient risk management and compliance procedures; (ii) as a result of the foregoing deficiencies, the Company had, inter alia, failed to comply with applicable student loan servicing standards, misclassified certain credit card accounts, overcharged customers, and failed to stem its ballooning credit card delinquency rate; (iii) the foregoing issues, when they became known, would subject DFS to significant financial exposure, regulatory scrutiny, and reputational harm; and (iv) as a result, the Company’s public statements were materially false and misleading at all relevant times.
On July 20, 2022, DFS issued a press release announcing its financial results for the second quarter of 2022. Among other items, DFS disclosed that it “is suspending until further notice its existing share repurchase program because of an internal investigation relating to its student loan servicing practices and related compliance matters.” The Company also advised that “[t]he investigation is ongoing and is being conducted by a board-appointed independent special committee.”
On this news, DFS’s stock price fell $9.80 per share, or 8.93%, to close at $100 per share on July 21, 2022.
On July 19, 2023, DFS issued a press release announcing its financial results for the second quarter of 2023. Among other items, DFS disclosed that it had misclassified certain credit card products over an approximate 15-year period as a result of an acknowledged compliance failure. Specifically, DFS disclosed that it had incorrectly classified certain credit card accounts into its highest merchant and merchant acquirer pricing tier, beginning around mid-2007. In addition, the Company disclosed receipt of a proposed consent order from the Federal Deposit Insurance Corporation (“FDIC”) in connection with an unrelated regulatory matter.
On this news, DFS’s stock price fell $19.40 per share, or 15.92%, to close at $102.45 per share on July 20, 2023.
On August 14, 2023, DFS issued a press release announcing that its Board of Directors (the “Board”) and Defendant Roger C. Hochschild (“Hochschild”) “have agreed that Hochschild will step down as Chief Executive Officer [“CEO”] and President and as a member of the Board”, effective immediately. Notably, the same press release also quoted DFS’s Chair of the Board, who assured investors that “[t]he Board is continuously focused on Discover reaching its full potential across the business, including our commitment to enhancing compliance, risk management and corporate governance.” (Emphasis added.)
That same day, in an exhibit to an SEC filing, DFS also disclosed that its credit card delinquency rate increased to 3.00% for the 24-month period ended July 31, 2023, as compared to 2.86% for the 24-month period ended June 31, 2023. As reported by Seeking Alpha that day, the Company’s credit card delinquency rate now stood at a higher level than the pre-pandemic rate of 2.37% in July 2019.
Then, on August 15, 2023, Seeking Alpha published an article reporting on analyst speculation that Defendant Hochschild’s resignation was directly tied to DFS’s recently reported regulatory and risk oversight issues.
Following these developments, DFS’s stock price fell $9.69 per share, or 9.44%, to close at $92.96 per share on August 15, 2023.
If you are a long-term stockholder of DFS, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, by telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York and California. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Contact Information:
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
investigations@bespc.com
www.bespc.com
