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Life for billionaire Steve Wynn has certainly taken a turn. After accusations of sexual misconduct surfaced against him, and $7.5 million paid out in related settlements, shares of Wynn's company plummeted by 10 percent, or more than $2 billion. Wynn personally lost a quarter billion. And it gets worse from there.
A settlement was reached in Wynn's ongoing litigation with Universal Entertainment to the tune of $2.4 billion. Universal filed suit to force the redemption of shares in Wynn's company after Wynn and Kazuo Okada, his former business partner, had a falling out.
When corporations imagine a painful settlement, paying out $2.4 billion is about as painful as it can get. And Wynn Resorts has definitely been feeling the pain as they prepare to cut a $2.4B check to Universal Entertainment before the end of the month.
However, despite the massive price tag of the settlement, when the dust settles, Wynn may soon be in a position to divest his majority position, as is common when goliath investors are saddled with public scorn as a result of controversy. Wynn is also involved in other litigation relating to the deal gone south with Universal, but that litigation is directly with Okada who alleges he was improperly ousted because Wynn was afraid of losing control of the company to Okada. Wynn, on the other hand, asserts that Okada had to be ousted due to allegations of corruption against Okada.
For shareholders, news of the massive settlement may not feel great, initially as the market reacts. However, if it does in fact clear a path for Wynn to divest, it could result in long term gains for investors. After all, in this day and age, where sexual harassers are publicly vilified, corporations simply cannot afford to have their images tarnished by its own officers and employees. The public notices and reacts and Wynn Resorts is global. Also, it's worth noting that Wynn Resorts generates a good chunk of revenue from its properties in China, which has a much lower tolerance for sexual harassment.
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