Two shareholders of Las Vegas Sands Corp. have sued the casino operator's board of directors over the falling price of the company's shares, which have lost roughly 95 percent of their value in the past 14 months, the Las Vegas Review Journal reported yesterday.
According to the report, the lawsuit, filed last month, accused the company's directors of gross mismanagement, breaching their fiduciary responsibilities, and wasting corporate assets while the company's share price plummeted.
Shares of Las Vegas Sands traded as high as 148.76 US dollars in October last year, however last month the company hit an all-time low of 2.89 US dollars, and on Thursday, the company's stock price closed at 4.64 US dollars on the New York Stock Exchange.
"This was an important company, but its reputation has gone down drastically and it has become the butt of jokes," the newspaper quoted Gregory Nespole, a New York-based attorney who is overseeing the lawsuit. "Our position is this company has been woefully mismanaged by senior management and there has been an admission to that effect."
According to the report, Las Vegas Sands spokesman Ron Reese said the company has a policy of not commenting on pending lawsuits.
Throughout this year, the stock prices of publicly traded gaming companies such as Las Vegas Sands, MGM Mirage, Boyd Gaming Corp. and International Game Technology, have tumbled anywhere from 70 percent to more than 90 percent, the report said, adding that Deutsche Bank gaming analyst Bill Lerner also expects to see similar lawsuits surface.
"In this environment, where stock price drops are so precipitous, shareholder lawsuits are not uncommon," Lerner was quoted as saying. "It's not that it's OK for investors to lose significant amounts of money, but sometimes these lawsuits are more nuisance suits."
Nespole said, according to the Las Vegas Review Journal, the case is not a class action lawsuit, but was brought by Shmyer Breuer and David Barfield, two New York-area Las Vegas Sands shareholders, "who are disturbed to see how this company and its stock price have collapsed."
Sheldon Adelson, who founded Las Vegas Sands in 1988 and took the casino operator public in December 2004, controls just more than 51 percent of the company's outstanding stock.
Adelson was named in the lawsuit, along with board members Irwin Chafetz, Charles Forman, George Koo, Michael Leven, James Purcell, Irwin Siegel and company President and Chief Operating Officer Bill Weidner.
The filing details much of the company's financial undoings over the past year, including the company's November 11 filing with the Securities and Exchange Commission that details a growing discord between Adelson and members of senior management. The company said a board committee was formed to evaluate decision making and resolve disputes between Adelson and management.
Nespole, who represented shareholders of Harrah's Entertainment and Station Casinos when the companies were going through private-equity buyouts, said the case could lead to Las Vegas Sands directors making monetary payments to the aggrieved shareholders and the company.
"Ultimately, we hope to bring about meaningful corporate governance reform at Las Vegas Sands," Nespole was quoted as saying by Las Vegas Review Journal.