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SEC probes Wynn Resorts Macau dealings
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Steve Wynn:
Wynn Resorts Ltd under U.S. Securities and Exchange Commission probe.
LAS VEGAS REVIEW-JOURNAL
The U.S. Securities and Exchange Commission is investigating Wynn Resorts Ltd's business practices in Macau, the company disclosed in SEC filings Monday.
The SEC's probe relates to a dispute between Wynn Resorts and its largest shareholder, Kazuo Okada, which includes Okada's demand for release of company records related to a $135 million donation pledged by Wynn Resorts to a foundation run by the University of Macau.
Okada is a Wynn Resorts director and owns almost 20 percent of the Las Vegas-based company through his Universal Entertainment Inc. He sued the company in Clark County District Court, seeking access to company financial records.
In a regulatory filing Monday, Wynn Resorts said that after a Feb. 8 hearing on Okada's lawsuit, "the company received a letter from the Salt Lake City regional office of the (SEC) requesting that, in connection with a informal inquiry by the SEC, the company preserve information relating to the donation to the University of Macau."
The SEC also requested documents related to any other donations to educational charitable institutions, including the University of Macau Development Foundation, and documents related to "the company's casino or concession gaming license or renewal in Macau."
"The pledge was made following an extensive analysis which concluded that the gift was made in accordance with all applicable laws," Wynn Resorts said in the disclosure. "The company intends to fully comply with the SEC's request."
Wynn Resorts is the second Las Vegas-based casino operator to face an SEC probe of business operations in Macau.
On March 1, Las Vegas Sands Corp., which has long had a casino in Macau and will soon open a much larger resort there, revealed that the SEC and Justice Department are investigating possible violations of the Foreign Corrupt Practices Act. The 1977 federal law prohibits U.S. citizens from offering bribes to a foreign official to obtain or retain business advantage.
Wynn Resorts did not disclose what, if any alleged violations the SEC is investigating. The agency declined comment. Wynn operates Wynn Macau and Encore at Wynn Macau and is waiting for the Chinese government to approve a major new resort planned for the Cotai Strip area of the former Portuguese colony.
Deutsche Bank analyst Carlos Santarelli dismissed the impact of the SEC's Wynn Resort probe. "We believe this will ultimately prove to be a largely inconsequential investigation, though we do wonder whether the investigation deters potential new investors ... who currently view Wynn as a reasonable relative value at current levels," Santarelli said in a note to clients Monday.
Santarelli said the investigation can go one of two directions, with the SEC dropping the matter with a declaration of "no findings" or instituting a formal investigation, "in which case the SEC would likely subpoena documents."
Shares of Wynn Resorts dropped $2.64, 2.33 percent, to close Monday at $110.56 on heavy volume of 3.72 million shares traded on the Nasdaq Global Select Market.
Wynn Resorts founder and CEO Steve Wynn addressed the investigation in a letter Monday to all employees.
"In light of the media attention that Mr. Okada has recently generated, it is not surprising that his disagreements with the company have caught the attention of regulators," Wynn wrote. "As you know, Macau is a critical market for both Wynn companies. Unfortunately, the donation to the university is not the only disagreement the board of directors has had with Mr. Okada.''
Wynn also repeated earlier comments about Okada's development of a $2 billion resort in Manila that makes him "a significant new competitor" to Wynn's resorts in Asia. Wynn has indicated that he believes the Manila development, which Wynn Resorts rejected, is driving Okada's lawsuit.
While Wynn Resorts has argued that Okada does not have the right to inspect company records, Clark County District Judge Elizabeth Gonzalez on Feb. 8 gave the company two weeks to review Okada's list and either allow him access or deny it. She will then decide at a Feb. 23 hearing whether Okada has the right to see any documents the company denies.
In its SEC filing Monday, Wynn Resorts disclosed more details about its donation to the University of Macau, which is sanctioned by the governments of Macau and China.
"As previously disclosed in May 2011, Wynn Macau, a majority-owned subsidiary of Wynn Resorts Ltd, made a commitment to the University of Macau Development Foundation in support of the new Asia-Pacific Academy of Economics and Management. This contribution consists of a $25 million payment made in May 2011 and a commitment for additional donations of $10 million each year for the calendar years 2012 through 2022 inclusive," the regulatory filing said.
"The pledge was considered by the boards of directors of both (Wynn Resorts) and Wynn Macau and approved by 15 of the 16 directors who serve on those boards," the filing said. "The sole dissenting vote was Mr. Kazuo Okada whose stated objection was to the length of time over which the donation would occur, not its propriety."
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Adelson contributes to Newt Gingrich campaign ... Sands under investigation ... hmmm ...
Wynn criticizes Obama and now Securities and Exchange Commission is investigating him? Just wondering out loud ...
Lesson of the day: Kasuo Okada is angry because Steve Wynn would not OPERATE or INVEST in Okada's Manila Casino after Kasuo Okada assumed that they would. After all, Mr Okada bought into the business and therefore should be able to get some networking going on, and support for HIS business ventures. As a typical Asian typhoon (or tycoon depending on how you spell it), he wants punishment for those who do not show respect. He had expectations, and Steve Wynn didn't meet them. This is really really bad in Asian business. When you get into bed with someone, you REALLY have to get into bed with them or you will anger them. So.....he goes after Wynn in the press by claiming Directorship rights he does not possess. He makes some false claim that Wynn is hiding something.....typical Asian business accusation claiming he was treated UNFAIRLY. Then he calls up his buddy at the Dept of State to talk to the Obama administration. The Chinese have influence in every Presidential administration, and especially in this one. This is a WIN WIN against WYNN for this President because he gets to appease an financially influential Asian (big contributor through 3rd party donors) and he get's to take a shot at Steve Wynn. The SEC will find some obscure omission on one piece of paper that Wynn failed to disclose or file or whatever. All Steve has to do is hope and pray that there is a change in leadership in the White House, and this witch hunt will all go away. General Motors and GE all have to do business in exactly the same way in China (or Macau or wherever in Asia), but you don't see THEM getting investigated....WHY? Hmmm....not a WIN WIN
The muscle comes from the DOJ....LOL. The SEC is not even a investigatory agency, not sure what they have done except rubber stamp insider corruption.
The DOJ; the agency that just punted on the METRO murders. The agency that can not muster the clout to charge Ensign. Hell the DOJ is a puppet of Harry today and who ever is in "control" tomorrow.
Unbievably low taxes on gaming here, high taxes in China. Wynn pays much more in taxes in China than here. Now add to this payoffs to "a University Fund"...it stinks to high heaven
COULDN'T HAPPEN TO A NICER SCHMOE....
The SEC is basically an investigatory, regulatory and accounting agency. Expect nothing but showboating to appease the concurrent Sands investigation (their lawyers probably called for unbiased oversight). Not even a slap on the wrist. The muscle comes from the DOJ. However, it is interesting that we allow the Chinese to invest heavily in this country and buy up foreclosed homes in Las Vegas. Yet, I have never heard of a Chinese business making a massive financial donation to any social project in the US. How many US citizens own homes in China for investment.
I don't follow WYNN, but it's obvious that anyone who feels that Steve is giving them a raw deal could just pick up their 4g device and issue a SELL order.
While Okada was a Board Member, he was almost certainly prohibited from issuing a market order to do that; those ridiculous SEC "insider-trading" regulations.
Abolish the unconstitutional SEC!
The SEC has always been COMPLETELY politicized, dating back to its New Deal origins under the control of that old bootlegger, serial philanderer, and BIG league stock manipulator Joe Kennedy (father of the President).
If you can't trust the Directors and/or Management of a firm to treat the firm's shareholders fairly (the aforementioned are often only *minimal* stakeholders!) then please DO NOT buy shares in that firm.
I doubt it will be the SEC but eventually someone is going to put the pieces together and figure out what the heck is going on. The dispute with Okada seems avoidable and definitely not Wynn-like. Based on what is public so far, the whole thing is out of character and nonsensical. Clearly a piece of the puzzle is missing.
The $135 million donation to the heretofore little known University of Macau looks in some ways like the $100 million plus that Sheldon Adelson planned to spend on the “Adelson Center for U.S.-China Enterprise” in Beijing. The purposes of that center were unclear here in the US but they must have been clear to Chinese government officials. They forced Adelson to shut the center after less than a year.
A skeptical outsider might wonder if both efforts were merely ruses (conduits) for buying influence. If there are any curious investigative journalists left, we might find out.
@Jim- You wrote- "Steve is one of the only business people brave enough to stand up and confront the socialists / progressives / democrats." Then why did he contribute to much to the re-election of Cleanface Reid? Pull your head out of the sand.