Visa’s top executives and directors are facing a shareholder derivative lawsuit in California federal court, accusing them of misleading investors about the regulatory risks associated with the company's anticompetitive practices. The lawsuit, filed Friday by shareholder Manh Ho, claims Visa understated the likelihood of antitrust investigations, which became the focus of a U.S. Department of Justice (DOJ) lawsuit last year.

DOJ Lawsuit Uncovers Alleged Antitrust Misconduct

According to the DOJ’s September complaint, Visa strategically partners with emerging financial players before they can grow into serious market competitors. The DOJ alleges this practice cements Visa’s dominance while restricting competitors’ ability to introduce disruptive payment technologies.

The shareholder suit specifically highlights Visa’s contract with JPMorgan Chase, which allegedly required that 90% of Visa-branded debit cards issued by the bank be limited to just one unaffiliated PIN network. This restriction, according to the lawsuit, prevents smaller networks from gaining market share and reinforces Visa’s monopoly power.

Visa’s agreements allegedly force debit card issuers into contracts that limit rival networks’ presence, thereby reducing competition and merchant choice, according to the complaint.

Executives Allegedly Misled Investors on Antitrust Risks

Ho’s derivative complaint claims Visa failed to fully disclose its regulatory risks, particularly in its November 16, 2023, annual report. Instead of addressing potential antitrust concerns, Visa provided only generic risk disclosures, stating that the company is "subject to complex and evolving global regulations that could harm our business and financial results."

For months, Visa continued making similar vague statements, according to Ho, while allegedly engaging in anticompetitive practices that heightened its exposure to legal action.

The lawsuit names Visa CEO Ryan McInerney, Chief Financial Officer Chris Suh, and several company executives and directors as defendants. Ho alleges that during the relevant period, these individuals profited from insider trading, collectively netting $12.6 million.

Stock Price Drop and Investor Losses

The lawsuit claims Visa’s executives allowed the company to overpay for stock repurchases, further damaging shareholders. The truth about Visa’s legal jeopardy, the complaint states, was not revealed until September 23, 2024, when reports surfaced that the DOJ was preparing to file an antitrust lawsuit.

When the DOJ officially filed its complaint the next day, Visa’s stock price plummeted by $15.85 per share, representing a 15% drop, and closing at $272.78.

Legal Claims and Ongoing Litigation

The shareholder derivative suit accuses Visa’s leadership of:

• Unjust enrichment
• Gross mismanagement
• Wasting corporate assets
• Violations of the Exchange Act

Additionally, Visa is already facing a securities class action in California federal court over allegations that it misled investors about its anticompetitive behavior.

Attorneys for Ho and a Visa spokesperson did not immediately respond to requests for comment.

Ho is represented by Robert C. Moest and Timothy Brown of The Brown Law Firm PC. Legal counsel for Visa and its executives was not immediately available.