New York State Comptroller Thomas DiNapoli announced Monday that he has filed a lawsuit against the officers and directors of Wynn Resorts Ltd. in response to recent revelations about the founder and former CEO of the company, Stephen Wynn.
The lawsuit alleges that certain officers and directors were aware that former CEO Stephen Wynn repeatedly made unwanted sexual advances towards employees and pressured employees to perform sex acts, yet failed to investigate or hold him accountable.
DiNapoli is a Trustee of the New York State Common Retirement Fund, which holds investments in Wynn Resorts Ltd. as part of its portfolio. Because of his role, DiNapoli is able to file a derivative lawsuit which allows shareholders to take legal action on behalf of a corporation when the company’s officers or directors have not met their obligations as fiduciaries of the company.
“These board directors and officers were duty-bound to protect employees and the company, yet they failed to confront allegations of predatory behavior,” DiNapoli said. “We are asking the court to hold accountable the company officers and directors who allowed this behavior to go unchecked. The deeply disturbing revelations underscore that this board was loyal to Mr. Wynn at the expense of the safety of the company's employees and the company’s shareholders.”
DiNapoli’s lawsuit seeks to have Wynn Resorts’ take “necessary actions to enhance the Company’s governance to comply with applicable laws and to protect Wynn Resorts, its employees, and its stockholders from repeating the harms described” in the complaint.
The lawsuit alleges that the Wynn Resorts 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 (former board member and Mr. Wynn’s ex-wife).
According to the lawsuit, the board’s failure to act on this and other reports of Mr. Wynn’s pattern of sexual abuse and harassment of his employees was a breach of their fiduciary duties to the company.
Moreover, because gambling is a heavily regulated industry that requires a showing of “suitability” to obtain and maintain a gaming license, the board’s concealment of allegations against Mr. Wynn puts the company’s gaming licenses in jeopardy.
Mr. Wynn resigned in response to public pressure following a published report, based on interviews with more than 150 witnesses, which detailed his history of sexual abuse and harassment. Wynn Resorts’ stock value plummeted in the wake of the revelations and the company faces mounting lawsuits, the possible loss of its gaming licenses, and other legal and regulatory sanctions.
The full text of the complaint filed in District Court in Clark Co., Nevada can be read below