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Wynn Resorts Ltd. investors are suing the company and its directors in federal court over their failure to address the sexual harassment allegations that led to CEO Steve Wynn’s resignation earlier this month.
The Wynn Resorts board allegedly ignored “decades” of misconduct, damaging the company’s value and reputation, according to a Feb. 15 complaint in the U.S. District Court for the District of Nevada. Wynn’s fall came as a result of the #MeToo movement, which has helped expose workplace sexual harassment in corporate America.
Former employees repeatedly told the board about Wynn’s workplace sexual advances without the board taking any action, according to the complaint. Board members allegedly learned between 2009 and 2015 of a 2005 harassment settlement involving Wynn without taking action.
Wynn has denied the sexual harassment allegations. Wynn Resorts representatives didn’t immediately respond to a request for comment.
The board’s failure to investigate misconduct allegations against Wynn constitutes an intentional violation of its fiduciary duties, the complaint said.
The company’s stock dropped 10 percent when Wynn’s misconduct was publicly disclosed Jan. 26, and an additional 9.3 percent on Jan. 29, according to the complaint.
Wynn and the board’s actions exposed the company to significant liability, according to the complaint. Nevada and Massachusetts gaming regulators opened investigations into the allegations. At least two shareholder suits are pending in Nevada state court arising out of the same circumstances, filed Feb. 6 and 15.
The federal complaint seeks punitive damages, disgorgement of the board’s profits and compensation, and overhaul of Wynn Resorts’ corporate governance to prevent similar incidents.
The case is Broussard v. Hagenbuch , D. Nev., No. 2:18-cv-00293, complaint filed 2/15/18 .
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