A US District Court judge has ruled a shareholder lawsuit against Wynn Resorts Limited can proceed.
The Wynn Resorts lawsuit accuses Wynn management of deceiving investors by covering up the alleged long-running misconduct of former Wynn CEO Steve Wynn. According to the suit, Wynn forced female employees to perform sex acts.
Judge Andrew P. Gordon, District of Nevada, granted the plaintiffs’ certification motion and appointed Pomerantz LLP as lead class counsel. Judge Gordon also appointed Las Vegas’ Muelbauer Law as the local liaison.
As part of the ruling, Gordon wrote:
There is no dispute that the defendants’ alleged misrepresentations were publicly known because they are contained in the defendants’ press releases. [The plaintiffs] have presented sufficient evidence of reliance based on the fraud-on-the-market theory.
Wynn’s Alleged Misconduct First Revealed by WSJ in 2018
The Wall Street Journal first revealed Wynn’s alleged crimes in January 2018.
The article Dozens of People Recount Pattern of Sexual Misconduct by Las Vegas Mogul Steve Wynn uncovered numerous complaints of alleged sexual misconduct.
The piece claimed Wynn forced several female employees to perform sex acts on him. The investigation also revealed that one employee, allegedly forced to have sex with Wynn, received a $7.5 million settlement.
Wynn resigned as chairman and CEO of Wynn Resorts in 2018 but has always denied the allegations.
In addition to Wynn’s departure, the company gutted its management team over its alleged complicity in Wynn’s alleged misdeeds.
At the time, gaming regulators investigated. They found Wynn Resorts had allegedly consistently ignored allegations questioning Wynn’s behavior.
As a result, the Wynn Resorts lawsuit also names the C-level executives who were in place at Wynn at the time.
Named defendants, including former CEO Matt Maddox and current CEO Craig Scott Billings, are accused of failing to investigate reported sexual assault.
Regulatory Review Prompts Wynn Share Drop
In the wake of the Wall Street Journal report, the Massachusetts Gaming Commission (MGC) announced a regulatory review of Wynn Resorts.
In the aftermath, Wynn’s share price (Wynn Resorts 102,86 +0,17%) fell almost 10% in one day.
In the end, Massachusetts regulators fined Wynn $35 million for failing to disclose allegations to investors. The $7.5 million settlement also contributed to the regulatory ruling.
However, MGC allowed Wynn, building its $2.4 billion Encore Boston Harbor in Everett, Mass., to retain its operating license.
More Than Bottom Line Important to Investors
With the decision to appoint Pomerantz lead counsel, Gordon wrote:
Counsel is experienced in handling securities class actions and is familiar with applicable law, as shown by both their prior experience and their filings in this case.
Pomerantz LLP is a securities, antitrust-class, and corporate litigation firm with offices around the globe. The company’s founder, Abraham L. Pomerantz, pioneered the field of securities class actions more than 85 years ago.
Partner Murielle Steven Walsh, who leads the Wynn Resorts lawsuit, noted in a media release:
We are gratified that the court granted our certification motion. Plaintiffs will now be proceeding with merits discovery into the alleged misconduct by Stephen Wynn against Wynn’s female employees and the enabling actions by Wynn management that allowed it to go on for years. This case continues to demonstrate that corporate integrity and accountability are important issues to investors.