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Steve Wynn is gone, but his company's board is still under scrutiny

Steve Wynn is out at Wynn Resorts, but the company he founded and its board of directors are still under scrutiny....

Posted: Feb. 8, 2018 10:31 AM
Updated: Feb. 8, 2018 10:31 AM

Steve Wynn is out at Wynn Resorts, but the company he founded and its board of directors are still under scrutiny.

Wynn and the company's nine remaining board members were hit with a shareholder lawsuit on Tuesday afternoon.

The complaint claims the board "knowingly turned a blind eye to allegations of patently egregious misconduct" by Wynn, and that their actions, or lack thereof, constituted "egregious breaches of fiduciary duty."

Wynn stepped down as CEO and board chairman Tuesday evening, citing an "avalanche of negative publicity" that he claimed made it impossible to do his job.

Wynn's departure has not resolved the problems facing Wynn Resorts since the Wall Street Journal detailed numerous allegations of sexual misconduct against Wynn in a lengthy investigation. The two states where Wynn has casino licenses are conducting investigations, and lawsuits against the company could drag on for years.

"They're in a tough spot, because [Wynn's] name is on the door," said Charles Elson, who studies corporate governance at the University of Delaware.

Related: How much is Steve Wynn's exit package worth?

The shareholder suit, which comes from the Massachusetts-based Norfolk County Retirement System, was filed in Clark County District Court in Nevada shortly before Wynn's resignation was announced.

Wynn Resorts declined to comment on the lawsuit. Wynn has denied all charges against him, calling them "preposterous."

More legal action could be coming. Other law firms have said they're exploring possible shareholder suits, and have urged people who own stock to contact them.

Then there are the pending state investigations into the company. Officials in Massachusetts and Nevada that oversee the company's gaming licenses are still looking into allegations of sexual misconduct against Wynn.

In a statement, the Massachusetts Gaming Commission said Wednesday that it needs to assess the "overall impact and implications" of Wynn's resignation, but that its probe is ongoing.

Wynn Resorts is developing a massive resort and casino in Boston Harbor that's set to open in 2019.

Related: Massachusetts Steve Wynn probe hinges on $7.5 million settlement to manicurist

The Nevada Gaming Control Board said in a statement Wednesday that it plans to "continue with its investigation."

On top of all that, the Wynn Resorts board of directors has to complete its own investigation into Wynn's behavior.

The board formed a special committee to look into claims against Wynn after the Journal story was published. It's headed by Patricia Mulroy, the company's only female director.

Now that Wynn has resigned, the board's investigation is even more urgent, said Betsy Atkins, a corporate governance expert who currently serves on the boards of Schneider Electric, HD Supply, Cognizant and Volvo.

"It will definitely affect the severance negotiation and the exit package," Atkins said.

It's not clear how much money Wynn will receive on his way out the door. The company has indicated that some kind of severance is on the table.

"Details of Mr. Wynn's separation agreement will be disclosed when they are finalized," the company said in its press release announcing the leadership change.

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