This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Universal Entertainment Files Counterclaim Against Wynn Resorts

TOKYO, March 12, 2012 /PRNewswire/ -- Universal Entertainment Corporation, and its subsidiary Aruze USA, Inc., today filed a Counterclaim against Steve Wynn, Wynn Resorts (NASDAQ: WYNN), an officer of Wynn Resorts, and the individual members of the Wynn Resorts Board, to prevent the unjust and improper redemption of shares owned by Aruze USA, Inc., at a 30 percent discount, and to seek damages, punitive damages and treble damages. Universal Entertainment is seeking a permanent injunction, declaratory relief and multiple claims for damages caused by the actions of Mr. Wynn and the Wynn Resorts Board. 

The Counterclaim contends that Wynn Resorts' purported redemption violates the express language of multiple agreements between Steve Wynn and Aruze USA, and among Steve Wynn, Elaine Wynn, Wynn Resorts and Aruze USA.  Further, by means of the purported redemption, Mr. Wynn and the other members of the Board seek to profit from their illegal acts in a process that was corrupt and unfair, causing Universal Entertainment and Aruze USA irreparable damages based on an unproven pretext.

Kazuo Okada, Chairman of the Board of Directors of Universal Entertainment, said, "We are taking this action to protect our investment from what we believe to be an unconscionable course of conduct perpetrated by Steve Wynn and the Wynn Resorts Board of Directors to facilitate Mr. Wynn's agenda of maintaining his absolute control over Wynn Resorts and in order to enrich himself.  Our lawsuit contends that after having lost control of his previous ventures in Las Vegas, Mr. Wynn has undertaken this campaign to suppress dissenting views on the Wynn Resorts Board, particularly with regard to Wynn Resorts' unprecedented, inadequately explained and wasteful $135 million donation to the University of Macau, so that this venture would not end with the same result."

Mr. Okada added, "Our Counterclaim highlights that the Wynn Resorts Board did not exercise any independent judgment or otherwise act in a manner consistent with sound corporate governance principles.  Rather, the Wynn Resorts Board fell in line behind Mr. Wynn and authorized the illegal redemption of Aruze USA's shares following a hurried and incomplete investigation that lacked sufficient findings and any form of due process in accordance with appropriate governance principles and standards. We are confident in the strength of our claims and look forward to bringing them before the Court."

No Legal Basis for Redemption

Universal Entertainment's Counterclaim contains allegations, among others, that:
  • No redemption has occurred and that there is no legal basis for the redemption.
  • The stock held by Aruze USA is subject to transfer restrictions in a stockholders agreement, which preclude any redemption of Aruze USA's stock.
  • Unlike most Wynn Resorts shares, Aruze USA's shares were never subject to the redemption provision of the Wynn Resorts Articles of Incorporation, as Aruze USA acquired its interest before the redemption provisions became effective.

No Basis for Finding "Unsuitability"

The Counterclaim asserts that, even assuming that the provisions of the Wynn Resorts Articles of Incorporation were applicable to the shares held by Aruze USA (which Universal Entertainment argues they do not), the Board of Directors could not have in good faith determined that the standard was met for a finding that Mr. Okada, Universal or Aruze USA is "unsuitable."  Mr. Okada denies that there is basis for the finding by the Wynn Board of Directors that he is "unsuitable".  He says, "Universal Entertainment is a public company in Japan with its own Compliance Committee, which adheres to rules relating to business entertainment so that such entertainment is within industry practices and applicable laws. If we become aware that an employee has violated our rules, we impose discipline."

Universal notes that its subsidiary in the Philippines has a provisional gaming license and that the final license will be granted on the condition that the construction of the casino project is completed.  The license comes from building a casino within the designated economic zone for casinos.

Universal also notes that the Articles of Incorporation of Wynn Resorts require that the Board believe the person whose conduct is in question is "likely to jeopardize" Wynn Resorts' applications for, or existing, gaming licenses.  This would simply not be the case, as there is no basis under applicable gaming laws for any gaming authority to terminate or withdraw any gaming license or any pending application of Wynn Resorts or its subsidiaries based on the alleged wrongdoings.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.66 -0.09%
FB $118.58 0.85%
GOOG $698.30 0.76%
TSLA $241.82 0.44%
YHOO $36.53 -0.19%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.39 +16.09 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs