A dispute stemming from 2011 between Steve Wynn and Wynn Resorts Limited (NASDAQ:WYNN) Co-Founder Kazuo Okada has come full circle, with the company deciding to oust the Japanese board member; deeming him “unfit” to serve as a member of the Board of Directors.
Wynn Shares Rise
Shares for the casino rose 7 percent Tuesday to $121 on the news, which stems from an Official Wynn Resorts Press Release published Sunday. In the release, the company stated that its “Compliance Committee has concluded a year-long investigation after receiving an independent report detailing numerous apparent violations of the U.S. Foreign Corrupt Practices Act (FCPA) by Aruze USA, Inc., its parent company Universal Entertainment Corporation (JASDAQ Code: 6425) and its principal shareholder, Kazuo Okada. Mr. Okada is a Director of Wynn Resorts, Limited, and of Wynn Macau, Limited, a majority-owned subsidiary of the Company.”
Internal Investigation
An internal Wynn Resorts report filed by former United States FBI Director Louis Freeh stated, “Mr. Okada and his associates and companies appear to have engaged in a longstanding practice of making payments and gifts to his two chief gaming regulators at the Philippines Amusement and Gaming Corporation (PAGCOR), who directly oversee and regulated Mr. Okada’s Provisional Licensing Agreement to operate in that country.”
Former Nevada Governor Bob Miller is the current Chairman of the Compliance Committee and added, “The Compliance Committee and the entire Board are deeply disturbed by the behavior of Mr. Okada, and we have fulfilled our obligations to our stockholders, the State of Nevada and the Wynn community. As Directors of a gaming company privileged to hold licenses, we have a duty to uphold the highest ethical standards and comply with the laws and the terms of the licenses upon which our business depends. Unfortunately, it is very clear from the Freeh Report that Mr. Okada repeatedly flouted these requirements.”
After formally ousting Steve Wynn’s longtime business partner, the company announced it had filed a lawsuit against Mr. Okada, Aruze USA, Inc. and Universal Entertainment Corporation in Nevada District Court, Clark County for breach of fiduciary duty and related offenses.
Separate Lawsuit
The lawsuit is in part a reaction to a January 12th filing by Okada in the same District Court, which claims that Steve Wynn acted improperly when expanding his casino empire into the region of Macau – the only Chinese area where gambling is legalized. In the suit, Okada is requesting the release of financial records revolved around his investments into Wynn Resorts over the last ten years; which he claims have eclipsed $380 million.
Investor Sentiment
Tuesday’s stock price surge appears to reflect a strong amount of optimism in investor sentiment; especially considering the high-powered names – a former FBI Director and a former Nevada Governor – involved in the firm’s internal investigation.
Wynn Resorts Limited has a current Earnings Per Share of $4.88 with a dividend yield of 1.66 percent. Its Market Capitalization is $15.08 billion with a Price to Earnings Ratio of 24.71. Below are the Intraday and 2012 Year To Date stock charts for Wynn Resorts.
Dow Jones Reaches 13,000
The Dow Jones Industrial Average (DJIA) briefly surpassed 13,000 points during the morning stock market trading hours Tuesday. As of 1:00pm Eastern Time, the index had retreated slightly to below the important 13,000 psychological barrier but was still trading in positive territory for the session.
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