Casino operator Las Vegas Sands Corp has won dismissal in a Nevada court of a shareholder lawsuit alleging that during the global financial crisis of 2007-2008, the company made false statements about its development plans and liquidity, reported the Reuters news agency.
The report, carrying Wednesday’s date, cited a ruling issued by U.S. District judge Andrew Gordon that also dismissed claims against the company’s chairman and chief executive, Sheldon Adelson.
Reuters said some Las Vegas Sands shareholders alleged they were misled into overpaying for its stock in 2007 and 2008.
GGRAsia understands from industry sources that the lawsuit referred to is that brought by investor Frank Fosbre and others. The litigation was mentioned in Las Vegas Sands’ 2015 report.
The annual report said the lawsuit claimed that the company – via Mr Adelson and former president and chief operating officer William Weidner – “disseminated or approved materially false information, or failed to disclose material facts, through press releases, investor conference calls and other means from August 1, 2007 through November 6, 2008”.
The complainants had sought compensatory damages and payment of attorneys’ fees and costs.
On Thursday GGRAsia approached Las Vegas Sands for comment, but was told via email that the firm would not be making any statement on the matter.
Court papers filed in January 2016 during the discovery phase of the litigation said Mr Fosbre and others alleged Mr Adelson and Mr Weidner “repeatedly made false and misleading statements to the market that caused the price of Las Vegas Sands stock to trade at artificially-inflated prices”.
“Unbeknownst to investors, during the class [action] period, Las Vegas Sands was facing a severe liquidity crisis that threatened to bring down Las Vegas Sands because it lacked the cash and funding resources that would enable it to continue or complete its multimillion-dollar projects in the United States, Singapore and Macau,” said the January 2016 court filing.
On November 6, 2008, Las Vegas Sands’ then auditor, PricewaterhouseCoopers LLP expressed doubt about the group’s ability to continue as a going concern, according to court papers filed with the U.S. District Court in Clark County in January 2009 in another shareholder action against Las Vegas Sands.
On November 13, 2008, the group suspended its construction work on the Sands Cotai Central site in Macau’s Cotai district.
Subsequent to the auditor warning, the casino group’s share price fell by as much as 44 percent, said the 2009 court filing.
In the Fosbre lawsuit, the plaintiffs alleged that by the end of the period covered by that class action, the defendants were “forced to reveal to the public that Las Vegas Sands had been facing a severe liquidity crisis for many months, had run out of money, would have to halt most of its ongoing construction projects and needed an emergency infusion of cash to avoid bankruptcy.”
The January 2016 court filing added: “As Las Vegas Sands began to collapse due the liquidity crisis, its stock price declined precipitously. Las Vegas Sands’ stock, which was trading as high as US$140 a share during the class [action] period, declined to US$10 a share at the end of the class period once investors understood the true liquidity picture and the reduced earnings ability of Las Vegas Sands.”
The lawsuit alleged that moves to correct the course of the group – including Mr Adelson and his family injecting around US$1 billion into the firm – had been delayed to the detriment of other shareholders.
Feb 20, 2019Paradise Co Ltd, an operator of foreigner-only casinos in South Korea, reported a fourth-quarter loss that narrowed compared to the deficit in the equivalent quarter in 2017. The loss for the three...
"The opening of Morpheus only marks the beginning of the relaunch of City of Dreams"
Lawrence Ho Yau Lung
Chairman and chief executive of Asia casino developer and operator Melco Resorts