The state's legal action against the board of Wynn Resorts shows its willingness to hold directors accountable.
We recently published a series of articles on how activist investors are pushing for change at corporate boards. The stories examine the independence of boards at Oregon public companies, as well as the advanced age and tenure of directors.
But shareholder activism is not just a private-sector phenomenon. The state of Oregon took legal action this week against the board of Wynn Resorts for concealing former CEO Steve Wynn’s sexual assault and harassment of employees.
The civil case was filed Tuesday in the District Court in Clark County, Nevada, on behalf of the Oregon Public Employee Retirement Fund, which holds stock in Wynn Resorts. The shareholder lawsuit alleges the board remained “willfully blind” to the sexual predation of Steve Wynn, founder of the Nevada-based gambling and entertainment empire.
“The board actively engaged in a scheme to conceal and cover-up Steve Wynn’s sexual assault and sexual harassment. The board’s cover-up is, by definition, not in the interests of the company and not an exercise of its good-faith business judgement,” says the court filing.
The Oregon Public Employee Retirement Fund has considerable clout as an investor. On November 30, the fund held more than 8,000 shares in Wynn Resorts worth a total of $1.3 million. The value of shares in the company fell 13 per cent in January after the allegations came to light.
The state’s action is a warning to corporate boards that they will be held accountable for failing to carrying out their fiduciary duty by investors of all stripes.
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