Lawsuits which have been filed against International Game Technology, MGM Resorts International, and Las Vegas Sands Corp. are flaring up as shareholders bring the issues back into the lime light. The complaint is that shareholders are angry over the fact that they lost money through shares because certain facts were failed to be disclosed or false information was provided concerning the financial outlook of certain stocks.
The Past Situation
Shareholders in MGM Resorts International, which at the time was called MGM Mirage, filed derivative lawsuits against the company in 2009. This was due to that fact that between August 2007 and March 2009, the stock price declined. The reason why they had brought shares was based on a superior balance sheet supplied by MGM. However, when the company stock fell from around $15 in January 2009 to $1.89 in March of the same year, these shareholders lost a lot of money. The reason for this dramatic decline happened because MGM admitted that there was issues with their CityCenter development which is located on the Las Vegas Strip, to the point that it could face liquidity.
The Counter Argument
Attorneys of MGM Resorts recently made moves to dismiss two lawsuits. Their argument is that shareholders are attempting to blame the company for an economic breakdown which was obviously beyond their control. The credit crunch was a global catastrophe and was felt particularly badly in regions like Las Vegas which saw a massive decline in profits, not only for the gaming industry but also in other areas like real estate. MGM feels that it’s easy for shareholders to now take information provided by MGM before the crisis and claim that they were lying.
Another issue that was brought up by the MGM attorneys is that no specific comments have been quoted. Complaints have been made that particular projections were false and dates surrounding when the CityCenter would be finished were lies. But, they argue, this is what MGM believed was the case before the credit crisis occurred.
As evidence of the effects of the economic crisis throughout the gambling world, MGM are using a chart which shows that this decline was mirrored by three other casino companies at the same time: when MGM Resorts share price fell by 97 percent, Las Vegas Sands’ fell by about 92 percent, Boyd Gaming Corp.’s by 92 percent, and Wynn Resorts Ltd. by approximately 83 percent.
Previous Dismissals
Last year MGM failed to dismiss two law suits filed against Las Vegas Sands. The stock fell in 2007 from $144 to as little as $2 by 2009. Since then, the stocks have increased, partly due to the casino’s dealings with Asia. The decline wasn’t simply because the economy had declined so dramatically but that the company wasn’t doing well due to personal reasons and actually faced liquidity due to how much had already been spent in Singapore and Macau.