Wynn Resorts has reached a $70 million settlement agreement in a class-action lawsuit filed by its shareholders. The plaintiffs argued that the company failed to disclose the alleged sexual misconduct by its former CEO, Steve Wynn. The company’s share values plummeted when those accusations came to light in 2018.
The lawsuit was led by shareholders John and JoAnn Ferris and Jeffrey Larsen. They alleged that the price drop of Wynn Resorts stock was a consequence of the sexual misconduct allegations. They also claimed that company executives were aware of the allegations beforehand but did nothing to address them or warn investors. In early 2018, the stock price was over $200 per share. A year later, it dropped to around $96. Currently, the stock trades at around $80 per share.
A Wynn Resorts representative told the Las Vegas Review-Journal that the company is pleased to have resolved the long-standing legal matter. The out-of-pocket cost to the company will be $9.4 million, while insurance will cover the remainder. Although Wynn stepped down from the company in 2018, the various lawsuits and investigations resulting from the accusations against him have dragged on for years.
The misconduct allegations against Wynn were first reported in early 2018 by The Wall Street Journal. The news outlet detailed accusations of sexual harassment made by female employees and claimed that one woman had been paid a $7.5 million hush money settlement. Wynn resigned as CEO amid the backlash, though he has denied the allegations. He also stepped down as the finance chair of the Republican National Committee.
Settlement Distribution is Unclear
A representative of the New York-based law firm Pomerantz LLP, representing the plaintiffs, told the Review-Journal that the exact amount each shareholder will receive from the settlement is unclear. The distribution will depend on how many shareholders file claims and the court’s approval of attorneys’ fees and costs.
Pomerantz partner Murielle Steven Walsh, who led the lawsuit, said investors care about corporate integrity and accountability. She added that companies accused of covering up information face steep financial consequences.
This case should serve as a warning to corporations and their officers that talk is not, in fact, cheap.
An Expensive Series of Settlements
This settlement isn’t the only hefty legal expense facing Wynn. Unrelatedly, it has also had to forfeit $130 million to the Department of Justice (DOJ) as part of a non-prosecution agreement for unlicensed money transfers that took place a decade ago.
Neither is the investors’ lawsuit the only legal battle the company has faced for the Steve Wynn scandal and alleged coverup.
Last September, Wynn Resorts settled with nine anonymous women for an undisclosed amount. The plaintiffs claimed they were among the victims of Wynn’s alleged sexual abuse and that Wynn Resorts knew about his alleged behavior but didn’t act. The women filed their complaint anonymously to protect themselves against potential defamation lawsuits by the former CEO.
Furthermore, in 2019, Wynn Resorts paid the Nevada Gaming Commission a $20 million fine for failing to respond to the harassment complaints. Three months later, it paid $35 million to the Massachusetts Gaming Commission on similar grounds. The Massachusetts regulator also fined then-CEO Matt Maddox an additional $500,000.
Personal Consequences for Wynn
Steve Wynn himself has also been embroiled in a series of legal dramas, some related to the alleged sexual misconduct, others not. In June, a federal appeals court rejected an appeal by the DOJ in its case against Wynn, in which it was seeking to compel him to register as a foreign agent under the Foreign Agents Registration Act. The DOJ argued that Wynn lobbied the Trump Administration on behalf of the People’s Republic of China. A district court judge dismissed the DOJ’s suit in October 2022.
In early September, the Nevada Supreme Court ended a defamation lawsuit Wynn had brought against the Associated Press about a 2018 news story where two women alleged Wynn committed sexual misconduct. The Supreme Court upheld a February ruling that cited Nevada’s anti-SLAPP law: “strategic lawsuits against public participation” that blocks lawsuits filed to intimidate or silence critics.
Last year, Wynn agreed with Nevada regulators to pay $10 million to settle a 2019 sexual harassment complaint. The former CEO also agreed to dissociate himself from further involvement in the Nevada gaming industry. While he agreed to the payment, Wynn still hasn’t admitted any wrongdoing and continues to deny the allegations.
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