Massachusetts to “aggressively continue” Wynn Resorts probe despite Steve Wynn’s exit
Casino operator Wynn Resorts’ share price may have bounced back after Steve Wynn’s resignation, but the company’s regulatory woes are far from over.
Wynn Resorts stock price closed out Wednesday’s trading up 8.6% to $177.32 as investors reacted positively to Tuesday’s resignation of chairman/CEO Steve Wynn. The announcement came 10 days after the Wall Street Journal broke the story of decades’ worth of sexual harassment allegations by Steve Wynn against Wynn Resorts female staff – allegations that Steve continues to deny.
Wynn’s shares still have a long way to go to regain the nearly $200 price they enjoyed before the WSJ report, and more aftershocks appear possible, particularly given the three separate regulatory probes – in Nevada, Massachusetts and Macau – into the company’s knowledge and handling of the allegations.
On Wednesday, Massachusetts Gaming Commission (MGC) exec director Ed Bedrosian said the MGC’s probe “aggressively continues” and while investigators would “consider” Steve’s resignation as they go forward, “it will not stop their work.”
Last week, the MGC held a hearing into the allegations, with a particular focus on the $7.5m settlement Wynn paid a manicurist in a 2005 private settlement. MGC investigators believe “steps were taken” to keep evidence of this settlement out of the public eye and Wynn officials didn’t volunteer its existence during Wynn’s 2013 suitability hearings in Massachusetts.
Among the items the MGC probe will consider is Steve’s continued stock ownership in the company he founded. Steve holds an 11.8% stake in Wynn Resorts and it appears doubtful that anything in his management contract forces him to divest himself of this stake just because he’s losing his corner office.
Furthermore, Fortune reported Wednesday that Steve has agreements in place that could put him in line for a golden handshake of $330m. Steve’s current employment contract extends through 2022 and calls for him to receive triple his annual salary and bonus for being forced out “without cause” or for stepping down of his own volition “for good reason.”
The MGC is also weighing Steve’s management control and influence, as well as whether his brand is now Weinstein-level toxic. Wynn Resorts is currently building the $2.4b Wynn Boston Harbor resort in the state.
Barron’s quoted analyst Adam Trivison suggesting Steve’s exit could spur the sale of individual Wynn Resorts properties or possibly the whole company. Both Malaysia’s Genting Group and US operator Caesars Entertainment – neither of which has a presence in Macau – could make a concerted effort to pick up Wynn’s pieces.
Typically, some aggrieved Wynn Resorts shareholders have already sued the company’s board of directors for breaching their fiduciary duty by failing to alert the investing public regarding Steve’s alleged pattern of misbehavior.
Meanwhile, the Washington Post’s media reporter Paul Farhi suggested there might be more to Monday’s report by the Las Vegas Review-Journal, which admitted its then-publisher spiked a 1998 story that included multiple allegations of sexual impropriety involving Steve Wynn and Wynn Resorts’ female staff.
Farhi noted that Las Vegas Sands boss Sheldon Adelson – Steve Wynn’s on-again, off-again friend/rival/frenemy – bought the LVRJ in 2015, and Farhi suggested “a possible payback subplot” in the LVRJ’s decision to dig up the story it once killed.
LVRJ editor J. Keith Moyer rejected this salacious scenario, saying Adelson “read this story this morning for the first time like everyone else … We’re just reporting what’s going on.”
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