NEW YORK, Aug. 3, 2021 /PRNewswire/ -- On July 28, 2021, U.S. District Judge Andrew P. Gordon of the District of Nevada denied, in part, Wynn Resorts Limited's ("Wynn Resorts" or the "Company") motions to dismiss the Second Amended Complaint in a securities fraud class action suit arising from the Company's concealment of a long-running pattern of alleged sexual misconduct by CEO and founder Stephen ("Steve") Wynn against female employees of the company.
The misconduct was first revealed in January 2018 with the publication of a Wall Street Journal article detailing numerous Wynn employees' complaints of abuse at the hands of Wynn. Gaming regulators later confirmed that the Company had repeatedly turned a blind eye to allegations regarding Wynn's conduct and failed to investigate reports of sexual assault. Wynn resigned soon after, and the Company was forced to clean house and replace the management that had covered up Wynn's misdeeds.
The district court granted defendant's motion to dismiss the complaint in May 2020, while granting plaintiffs leave to amend. The plaintiffs filed a Second Amended Complaint that challenged four sets of misstatements made by the defendants.
The court denied the defendants' motions to dismiss, in part, upholding the plaintiffs' claims based upon a 2016 press release issued by the Company denying allegations by Steve Wynn's ex-wife that Wynn had engaged in misconduct and that the Company was withholding information from gaming regulators, and statements issued by the Company and Steve Wynn denying the Wall Street Journal's allegations and claiming that the Company had a hotline in place for reporting harassment and similar misconduct (and that no reports had been filed, thereby implying that no sexual misconduct had occurred).
"At this stage, the plaintiffs have sufficiently alleged that Wynn, Maddox, Sinatra and Cootey were aware of information contradicting their statements that denied misconduct allegations," according to Judge Gordon. "The inference that these defendants were aware of Wynn's alleged misconduct at the time of their statements is cogent and compelling."
Pomerantz Partner Murielle Steven Walsh, who leads the litigation, stated, "We are pleased that the court upheld claims that arose from statements made by the company and Steve Wynn that effectively denied any wrongdoing by Wynn. The court's decision underscores the fact that alleged sexual misconduct and harassment by corporate executives are material issues for investors, especially when management turns a blind eye to reports of wrongdoing. This type of misconduct poses a threat to a company's financial success."
"The decision sends a stark message to corporations and their boards," according to Managing Partner Jeremy A. Lieberman, "that in the twenty-first century, the securities laws will be applied to all matters of import to investors, particularly relating to sexual harassment and ensuring a safe work environment for employees."
The case is Ferris, et al. v. Wynn Resorts Ltd., et al., No. 2:18-cv-00479-APG-DJA (D. Nev.).
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com.