(Bloomberg) — Discover Financial Services said it will miss a deadline to file its quarterly report with regulators, citing disagreements with the Securities and Exchange Commission over its accounting treatment of a credit card misclassification .

The company said in a filing Wednesday that it was unable to file Form 10-Q for the three months through Sept. 30 by the required date because SEC staff disagreed with “certain aspects of the Company’s accounting approach to the issue of card product misclassification. »

Discover revealed last year that it had overcharged merchants after misclassifying some credit card accounts in its highest pricing tier, and the CEO resigned as compliance concerns mounted. The credit card company said in July that it had reached an agreement to settle the class-action lawsuit with affected retailers and that it expected the $1.2 billion it has already put in side for related responsibilities are sufficient to resolve the problem.

Discover expects that when it files its Form 10-Q, it will likely reflect reallocations to prior periods of approximately $600 million of the charge on other expenses recorded in its quarterly report for the period ended March 31, he said. The company said that because the reallocations would offset a charge on other expenses recorded for the first quarter, “this would result in pre-tax profit increasing by the same amount in the three months ended March 31, 2024 and the nine month ended March 31, 2024. » September 30. »

Capital One Financial Corp. is expected to buy Discover in one of the biggest mergers announced this year. The SEC was reviewing Discover’s financial statements in connection with the pending merger, according to the filing.

A representative for Discover declined to comment beyond the filing. A representative for Capital One did not immediately respond to a request for comment.

A late financial statement can be considered a financial reporting red flag, and large companies go to great lengths to avoid missing SEC deadlines. In the filing Wednesday, Riverwoods, Ill.-based Discover said it likely would not file within the allotted five calendar day extension because it needed more time to resolve the issues . The company also has not determined whether it will need to redo or restate its prior financial statements to correct possible accounting errors, it said.

–With assistance from Nicola M. White.

More stories like this can be found at bloomberg.com