Wynn Resorts to Settle with Shareholders in Founder's Sexual Misconduct Scandal
Wynn Resorts has reached a settlement with hundreds of shareholders in a class-action lawsuit related to the sexual misconduct allegations involving the company's founder and former CEO, Steve Wynn. The Las Vegas Review-Journal reported on the settlement, which will reportedly reach $70 million.
The Wynn Las Vegas resort properties in Las Vegas, Nevada. (Source: Wynn Resorts)
LISTEN TO THIS ARTICLE:The lawsuit stems from claims that the company failed to disclose information regarding the allegations of misconduct against Wynn, leading to a significant drop in the company's stock value once the allegations became public in 2018. The settlement brings closure to a legal battle that has lasted several years and impacted the reputation and financial standing of Wynn Resorts.
Related: Ousted Wynn Resorts Founder Steve Wynn Fined in VegasThe class-action suit, brought by shareholders including John and JoAnn Ferris and Jeffrey Larsen, argued that Wynn Resorts executives were aware of the allegations against Wynn but did not take action or make appropriate disclosures. This inaction, according to the shareholders, directly affected the company's stock value, causing them financial losses when the misconduct allegations were revealed.
Shareholders claimed that Wynn's leadership failed to fulfill their fiduciary duties by allowing the situation to go unchecked. This ultimately led to financial harm to investors as the company's stock price plummeted following the 2018 allegations.
The settlement motion, filed by New York-based law firm Pomerantz LLP, is currently awaiting preliminary approval by the U.S. District Court in Nevada. If approved, it will be distributed among hundreds of Wynn Resorts shareholders, marking the end of one of the last legal battles tied to Steve Wynn's misconduct.
The case involved multiple defendants, including Wynn, several former Wynn executives, and nine former members of the company's board of directors. Current Wynn executives and board members, who were initially named in the lawsuit, were later dismissed from the case as those involved in the misconduct or its cover-up have since left the company.
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The Final Chapter
The allegations against Wynn first surfaced in 2018 when reports emerged detailing multiple claims of sexual harassment and assault. The fallout from these revelations was swift, leading to Wynn's resignation from his roles as chairman and CEO of Wynn Resorts.
Following his departure, the company took significant steps to distance itself from its founder, including removing his name from corporate branding and enacting new policies to improve workplace culture. Wynn has consistently denied the allegations of sexual misconduct, but the scandal has nonetheless left a lasting impact on the company's image and financial stability.
The $70 million settlement follows several other legal settlements and regulatory actions that Wynn Resorts has faced since the scandal broke. In the wake of the allegations, the company was fined by multiple state gaming regulators, including in Nevada and Massachusetts, for failing to act on the allegations sooner. These fines and legal costs, combined with the sharp decline in stock value after the allegations were revealed, have collectively resulted in significant financial consequences for the company and its shareholders.
Wynn Resorts representatives stated earlier this month that the settlement will resolve the last of the remaining legal matters tied to Steve Wynn's tenure with the company. Since his resignation, the company has undergone leadership changes and sought to rebuild its reputation by implementing new governance and compliance measures.
The company also worked to restore investor confidence, which had been shaken by the scandal and its aftermath. The settlement marks a final step in Wynn Resorts' efforts to move past the controversies surrounding its former CEO and ensure that its leadership is held accountable for maintaining ethical business practices.
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