Discover Financial Services Faces NYSE Notice and Restatement of Financial Statements

Discover Financial Services (NYSE:DFS) recently found itself in a challenging position as it received a notice from the New York Stock Exchange (NYSE) regarding its failure to timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024. The NYSE Notice highlighted the company’s non-compliance with Section 802.01E of the NYSE Listed Company Manual, which had a deadline of November 18, 2024, set by Rule 12b-25 under the Securities Exchange Act of 1934.

In light of this development, Discover Financial Services issued a press release on November 25, 2024, indicating its readiness to address the concerns raised by the NYSE Notice. The company also disclosed its plan to restate certain prior period financial statements, stemming from a past revelation made on July 19, 2023. The disclosure revealed a historical error related to the misclassification of credit card accounts, necessitating corrective measures to the tune of $365 million.

Additionally, Discover Financial Services announced a significant step it undertook on February 19, 2024, by entering into an all-stock merger agreement with Capital One Financial Corporation. This strategic decision was aimed at consolidating the two entities for future growth and expansion opportunities.

In a subsequent development, the company was engaged in discussions with the Staff of the SEC regarding its accounting approach for the previously mentioned misclassification issue. The Staff disagreed with the company’s application of revenue recognition guidance and proposed an Alternative Approach, amounting to approximately $1.047 billion. Following these deliberations, the Audit Committee, in collaboration with Deloitte & Touche LLP, determined a need to restate the financial statements for several periods to incorporate this Alternative Approach.

The restatements are expected to have substantial impacts on the company’s financial statements. Adjustments are projected to include increases in assets, accrued expenses, and liabilities, with corresponding decreases in retained earnings for certain periods. The company anticipates completing the filings related to these restated financial statements by the end of the year, subject to necessary regulatory approvals and procedures.

Investors and stakeholders are advised to exercise caution and closely monitor the developments as Discover Financial Services navigates these challenges and aims to rectify past discrepancies.

Disclaimer: This article contains forward-looking statements and investors are encouraged to remain vigilant and informed about the unfolding situation.]

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Discover Financial Services’s 8K filing here.

About Discover Financial Services

Discover Financial Services, through its subsidiaries, provides digital banking products and services, and payment services in the United States. It operates in two segments, Digital Banking and Payment Services. The Digital Banking segment offers Discover-branded credit cards to individuals; personal loans, home loans, and other consumer lending; and direct-to-consumer deposit products comprising savings accounts, certificates of deposit, money market accounts, IRA certificates of deposit, IRA savings accounts and checking accounts, and sweep accounts.