On February 22, 2018, Cohen Milstein filed a derivative action against certain officers and directors of Wynn Resorts, Ltd., including: former CEO and Chairman of the Board, Stephen A. Wynn; Secretary and General Counsel, Kimmarie Sinatra; and board members John J. Hagenbuch, Dr. Ray R. Irani, Jay L. Johnson, Robert J. Miller, Patricia Mulroy, Clark T. Randt, Jr., Alvin V. Shoemaker, J. Edward Virtue, and D. Boone Wayson. The lawsuit, filed on behalf of the New York State Common Retirement Fund and the New York City Pension Funds, is based on the officers and directors’ failure to hold Mr. Wynn accountable for his longstanding pattern of sexual abuse and harassment of Company employees. The lawsuit seeks to preserve stockholder value in Wynn Resorts, Ltd. by strengthening procedures for responding to claims of harassment and creating stronger governance and risk management controls at the Board level.
In response to vast public pressure following a January 26, 2018 Wall Street Journal exposé detailing Mr. Wynn’s history of sexual abuse and harassment following interviews with over 150 witnesses, Mr. Wynn resigned from the Company. Meanwhile, Wynn Resorts’ stockholders have lost billions in market value and the Company faces mounting lawsuits, the possible loss of its gaming licenses, and other legal and regulatory sanctions. The Board of Directors’ failure to act is consistent with the Company’s repeated poor marks for governance, underscoring a Board that is loyal to Mr. Wynn at the expense of the safety of Company employees.
The Complaint alleges that the Board knew of serious allegations against Mr. Wynn by, at the latest, March 28, 2016, when those allegations surfaced in litigation involving the Company and Elaine Wynn, Mr. Wynn’s ex-wife and former Board member. According to the Complaint, the Board’s subsequent failure to act on this and other reports of Mr. Wynn as a serial sexual harasser of Wynn Resorts’ employees was a breach of its fiduciary duties to the Company. Because gambling is a heavily regulated industry that, in the jurisdictions in which the Company operates casinos, requires a showing of “suitability” to obtain and maintain a gaming license, the Board’s effective concealment of allegations against Mr. Wynn puts the Company’s gaming licenses in jeopardy.
Cohen Milstein Sellers & Toll PLLC represents the New York State Common Retirement Fund and the New York City Pension Funds in this derivative action.