Lots of news on the legal front today for some of the best and worst stocks out there:
MasterCard settled an antitrust suit with American Express to the tune of $1.8 billion. AmEx had charged MasterCard, Visa, and several member banks with prohibiting financial institutions from issuing American Express credit cards. The settlement means a $1 billion charge for MasterCard in the second quarter.
Meanwhile, combined with a $2.5 billion payout from Visa arranged in November, American Express can look forward to hefty annual payments for the next three years, according to the Wall Street Journal (subscription required). Standard & Poor's analysts left American Express shares rated a "hold," as the windfall helps offset a worsening credit environment. MasterCard shares, which are up more than 80 percent over the past year, climbed nearly 5 percent in early trading. The company continues to outpace rivals like Discover Financial Services (which is also suing MasterCard and Visa) and Capital One despite worsening credit conditions, thanks in part to its lack of exposure to ailing consumer lending.
The Supreme Court ruled that Exxon Mobil should pay $500 million in punitive damages for the 1989 Exxon Valdez spill, reducing damages from $2.5 billion. It's the second time punitive damages have been lowered in the case. A jury originally said Exxon should pay $5 billion; a federal appeals court halved that payout. Shares were flat on the news.
And, finally, Countrywide Financial, the poster child of subprime mortgage lending excess, is expected to be slapped with a lawsuit by the state of Illinois attorney general's office alleging "unfair and deceptive practices" in selling billions' worth of mortgage loans, according to the WSJ . The news comes the same day shareholders are set to vote on a proposed takeover of the company by Bank of America.