Morgan Stanley has won a ruling in a lawsuit against Discover Financial Services (DFS), a US-based firm that issues Discover Card, reported Reuters. According to the ruling, DFS is obligated to pay approximately $800m as a special dividend to Morgan Stanley.
DFS said that it would appeal the court’s ruling, which has also called it to pay Morgan Stanley part of $2.75bn it won from a separate lawsuit against Visa and MasterCard.
Reportedly, Morgan Stanley, which had acquired DFS in the 1990s as part of its merger with brokerage firm Dean Witter, agued that it was entitled to receive a portion of DFS’ proceeds as per the terms of an agreement under which it spun off DFS in June 2007.
However, DFS claimed that it did not have to pay to Morgan Stanley since the investment bank interfered in its negotiations with Visa and MasterCard, violating an agreement over how to handle that litigation.
In a statement, Discover said: “Throughout these negotiations, Morgan Stanley engaged in unauthorized negotiations with and made a $100m payment to Visa and MasterCard that negatively affected the outcome of our final settlement.”
Morgan Stanley said: “We are pleased with the court’s opinion, which confirms that Discover is in breach of contract, and that there was never any basis for Discover to withhold payment to us,” reported the news agency.
