Royal Assets - Discover stock surges after reaching a deal with the FDIC

Discover Financial Services (DFS) was the best-performing stock in the S&P 500, with shares up 4.9% after the credit card company signed a consent deal with federal authorities over flaws in its Discover Bank unit's compliance management system.
NORTH BRIDGE ROAD, Singapore - Oct. 12, 2023 - PRLog -- In July, the business disclosed that it had received a proposed consent order from the Federal Deposit Insurance Corporation (FDIC) for what it described as "in the context of consumer compliance," but did not elaborate.

As part of the settlement agreement, Discover stated that it will "improve its consumer compliance management system and enhance related corporate governance and enterprise risk management practices."2 It will also boost board monitoring of these problems. Discover said that it had taken "significant steps" to tighten its compliance management system and address other concerns raised by the settlement decree. It said that no fines or monetary penalties were imposed in order to resolve the situation.

The business further stated that this action is unrelated to a previous FDIC complaint alleging that Discover misclassified credit cards into its highest merchant and merchant acquirer price category beginning in 2007.

The investigation into that incident is ongoing, according to Discover, and it might result in "additional enforcement actions or other supervisory activity from the FDIC and other regulatory agencies."

Despite Monday's advances, Discover Financial Services shares are still down for the year. Last week, they fell to their lowest level since February 2021.

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