Suit targets founder, board
Investor claims director ‘disregard’
lawsuit, brought by a shareholder on behalf of a corporation, generally is filed when the corporation has a valid cause of action but has refused to use it, according to the Legal Information Institute at Cornell University. This often happens when the defendant is someone close to the company, like a director or a corporate officer. If the suit is successful, the proceeds go to the corporation, not to the shareholder who brought the suit.
The suit points to recent articles by the Wall Street Journal and Las Vegas Review-journal, which contained allegations from several women who reported sexual misconduct at the hands of the casino mogul.
“Mr. Wynn’s reported decades of sustained egregious misconduct involving the company in his position and the board’s and general counsel’s intentional disregard of the misconduct, as alleged herein, has caused substantial losses and injury to the company, the value of the business and expansion projects and the continued operation and licensure of the company’s core business,” the suit states.
Nothing that Wynn’s stock in the company was valued at $2.4 billion last month, the suit also referenced a statement from the company’s board: “If we lose the services of Mr. Wynn, or he is unable to devote sufficient attention to our operation for any reason, our business may be significantly impaired.”
Board members also have a history of “acquiescing” to Wynn, and the company has come under fire for its “weak corporate governance and deference” to the founder, the suit said. Among other things, the board approved his use of corporate jets and land deals and agreed to lease Wynn’s personal art for $1 a year, while paying insurance, security and taxes, according to the complaint.
The suit also alleges that Wynn and the board kept secret a $7.5 million settlement, paid to a former employee through a shell company Wynn had established, “and failed to act and continued to support and recommend to the stockholders Mr. Wynn’s continued leadership and compensation.”
Wynn and the board continued to conceal the alleged misconduct, even as the board approved licensing applications, it said.
“The board knew of allegations of egregious misconduct by Mr. Wynn,” the suit alleges, “yet did nothing to address the existential risks posed to the company or to prevent defendant Wynn from continuing with egregious misconduct.”
Contact David Ferrara at dferrara@reviewjournal.com or 702-380-1039. Follow @ randompoker on Twitter.