Discover Financial Services (DFS) said late Monday it received a Nov. 19 notice from the New York Stock Exchange that it is out of compliance with stock market rules for failing to timely file its 10-Q report for the quarter ended Sept. 30 with the US Securities and Exchange Commission.
The company said it is attempting to untangle a $365 million financial classification error and smooth out disagreements between Discover and the SEC over its accounting of liabilities that arose during scrutiny of its proposed merger with Capital One Financial (COF).
The SEC has approved an alternative approach under which the maximum amount to be paid by the company in restitution for the card product misclassification is about $1.05 billion. This followed Discover earlier determining to increase its liability to $1.2 billion
Some financial statements, including for the fiscal quarters ended March 31, 2023, June 30, 2023, Sept. 30, 2023, March 31, 2024 and June 30, 2024, among others, need to be restated to reflect the alternative approach, Discover said.
The company said it is working "expeditiously" to file restated financial statements.
It also expects the Capital One merger to proceed to shareholder votes following the restatements.
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