Thanks to a regulatory filing published last week, beleaguered casino tycoon, Steve Wynn is now legally allowed to sell off some or all of his majority shares in Wynn resorts. This brings to an end a six-year-long court battle between Wynn, his ex-wife, Elaine, and his former business partner, Kazuo Okada. The court’s ruling comes a month after Wynn stepped down as the company’s Chairman and CEO, in response to the media storm created by allegations of sexual misconduct coming to light at the start of the year.
Wynn’s inability to dispose of more than a third of his shares until now was linked to a 2010 stockholders agreement preventing his ex-wife, Elaine, from selling any of her $1.6 billion (9.3%) stake in Wynn Resorts without his permission. A lengthy court battle between Wynn, Elaine and former business partner, Kazuo Okada, ensued. Ironically, this effectively also tied up Wynn’s own shares in the casino operator.
After news of the sexual misconduct allegations broke and he resigned as Wynn Resorts CEO, Wynn attempted to drop the legal battle between over this agreement. Just a few weeks ago, a Nevada District Court Judge denied Wynn’s request for the dissolution of the shareholders agreement, citing the intertwinement of the agreement’s validity with other issues.
Chief among these issues was the forced redemption of Kazuo Okada’s shares in 2011. Last week, however, this verdict was overturned and both Elaine and Steve Wynn are free to divest themselves of some or all of their shares. Although the mogul has said that he has no immediate plans to sell his majority (11.8%) shares in the casino operator, an imminent change of heart would be unsurprising, considering the circumstances.
Wynn’s distancing of himself from the Wynn Resorts brand amid what he has called “an avalanche of negative publicity” may seem like the smart move: Wynn Resorts shares plummeted 18% since the Wall Street Journal published the allegations. However, it could actually serve to alienate investors instead of reassuring them. Analysts say that “Mr Wynn is the Wynn” and that investors are concerned that the multinational empire will not survive without its founder at the helm. This may explain why stock prices did not immediately recover after Wynn stepped down as CEO.
This is not the end of Wynn’s woes, however. Gambling regulators in Nevada, Massachusetts and Macau have all announced plans to investigate the actions of sexual misconduct against him. How severely this will impact the Wynn Resorts brand remains to be seen.