Wednesday, November 07, 2007

Associated Press Goofs on Visa® / Amex® Settlement Story (

Wow, did the Associated Press goof. They must have had all the lead financial reporters covering the market plunge on Wednesday and had a second-string reporter copy press releases rather than research what is a huge admission by Visa®. You would think that $2,250,000,000 was enough money to get the story right?

According to AP, "The truce announced Wednesday rids Visa of a potential albatross before the San Francisco-based company's initial public offering of stock." The reality is the AmEx® settlement is puny when compared to the more than $100,000,000,000 mega-billion dollar violations that Visa, MasterCard® and their member banks could owe in our class-action merchant interchange litigation. With more than eight-hundred news and commentary postings - spanning more than 2 1/2 years - and with a great deal of attention drawn towards our litigation, Visa and its sister payment network, MasterCard, are not in the clear, by any means.

Extracted from the preceding SEC IPO filing, in MasterCard Inc's own words:

1) "... We have not established reserves for any of the significant legal proceedings in which we are currently involved."

2) "If we are found liable in any of these lawsuits, we may, among other things, be forced to pay damages and/or change our business practices and pricing structure, which could have a material adverse effect on our revenue and profitability, or, in certain circumstances, even cause us to become insolvent, and result in a significant reduction in the value, or the complete loss, of your investment ..."

3) "If we are less successful than Visa in defending interchange fees, we could also be competitively disadvantaged against Visa."

4) "If we are ultimately unsuccessful in our defense of interchange fees, such regulation may have a material adverse impact on our revenue, our prospects for future growth, and our overall business."

Largest Planned IPO Since Google has No Safety Net (

If you read into the AP story, it appears that Visa's IPO will now face calm waters. Hardly. Just look at their SEC filing and very clear risk factors that if [when] we are successful and prove our case that they illegally used their market power to conspire to fix prices, along with the triple damages, they could face "insolvency." The same is true for MasterCard as well. Can't get any clearer than that!

"Besides raising financial uncertainties, the case threatened to raise embarrassing questions about Visa's past business practices with a September trial date looming," said AP. Embarrassing?, just read the prior eight-hundred and one postings! Overlooking our weak grasp of English and liberal rules of grammar, and you see something much more ominous.

Although Visa today did not acknowledge any wrongdoing, a first-grader would know that something must have happened as they prepare to hand out $2,250,000,000. Could you imagine if they DID do something wrong?!

According to the AP story, "American Express' three-year-old lawsuit painted an unflattering portrait of Visa, alleging the network operator conspired with some of its largest card issuers to thwart American Express' growth." So far, MasterCard's head remains in the sand. Everyone at the card association seems blind to the reality of our case, especially Sharon Gamsin, their PR and communications hack, who according to the same wire story said "MasterCard remains confident about its defense against the allegations." Sure. Since the same financial institutions which own and control Visa and gave the green light to settle, were also on the MasterCard and Visa boards for many years, what's the difference?

Getting back to that first-grader, even they would have to conclusively understand that MasterCard is next to recognize that the game is up.

"Before IPO, Visa Reaches a $2.25 Billion AmEx Antitrust Settlement" (Digital Transactions)

[commentary:, via AP news story]