David Rosenthal: belief

Transcript context

…They were monetizing it just fine the way that they currently owned it. Yes. The profits being spit out of the system were just fine. In 2005, there finally was another huge antitrust lawsuit, I think, against both Visa and MasterCard. It actually is a class action lawsuit that the merchants brought. They basically got fully fed up with interchange. Every 10 years, there's some meaningful merchant push to try to change interchange, and they either do it in Congress, or they do it in a class action case. There's variety of different ways. This particular class action suit in 2005 is still running today. The numbers have mostly been figured out of how much Visa will owe from a 2012 ruling that then got appealed, so it's still going on. But basically, there was a lot of uncertainty in the 2005 and 2006 timeframe of, geez, what's the liability here going to be? MasterCard had gone public and did not sort through this issue at all. They just said, we're going public and shareholders, yup, there are lots of uncertainty in our future, and we'll see, but buy our stock. That, as you can imagine, did not go well at all. As they're getting ready to go public, for lots of reasons, basically it was time, they wanted to have some liquid currency that floated for acquisitions. They had to be competitive with MasterCard who was going public. Amex was already public. You can reward and retain talent easier. There are just lots of reasons why you would want this thing to be a standalone entity, especially at this point in history. What they had to do was they created these B shares, and they isolated all the liability from this class action suit to the B shares. While MasterCard had a pretty flubbed IPO, Visa had a great IPO because they said, whatever the courts rule, the banks who own the B shares, the pre-existing shareholders will own all that liability and all the A shares, the new people who are coming in as owners of the company, will be protected.…

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