Steve Wynn Sues Jim Chanos For Alleged Slander

By Mani
Updated on

Wynn Resorts, Limited (NASDAQ:WYNN) and its chairman Steve Wynn have filed a slander suit against short-seller Jim Chanos over an alleged statement that Wynn violated the federal Foreign Corrupt Practices Act.

Earlier Jim Chanos, founder of New York-based hedge fund Kynikos Associates LP, said he would no longer be long the Macau casinos.

Steve Wynn’s alleged violation of FCPA

According to a complaint filed by Wynn Resorts Ltd in federal court in San Francisco, Jim Chanos told an audience at an invitation-only event in Berkeley, California that Wynn Resorts, Limited (NASDAQ:WYNN) and its chairman Steve Wynn had violated the U.S. Federal Corrupt Practices Act.

The law suit seeks unspecified compensatory and punitive damages. In its complaint, Wynn Resorts Ltd said: “Wynn and Wynn Resorts have been thoroughly investigated in a public manner on numerous occasions by entities such as the Nevada Gaming Control Board, the Massachusetts Gaming Commission, the Securities and Exchange Commission and other government agencies”.  The complaint further added: “At no time has any official agency suggested that there is any reliable evidence that plaintiffs, or either of them, have violated the Foreign Corrupt Practices Act”.

China’s economy overheated

Jim Chanos’ hedge fund specializes in short selling, has been arguing that China’s economy is overheated thanks to its dependence on property development for growth. The short seller predicted a collapse of the Chinese “bubble” four years ago. In his recent interview on Bloomberg he said the problems have only doubled. He questioned China’s core economic model and reiterated his call that their economic miracle will collapse.

The prominent short-seller is popular for having shorted Enron Corp stock many months before the energy trader’s December 2011 bankruptcy. On May 15, he told CNBC television that he would “no longer be long the Macau casinos”, though he declined to say whether he was conducting short sales related to Macau.

Interestingly, Wynn Resorts said in July 2013, the SEC decided not to initiate enforcement action after probing an allegation by Japanese billionaire Kazuo Okada that the company may have violated the FCPA by donating $135 million to a university in Macau, a major gambling hub where Wynn Resorts operates.

For a third straight month in August, gross gaming revenue in Macau dropped as China’s anti-corruption campaign prompted high-rollers to avoid its gambling halls, hurting casinos’ earnings including at Wynn Macau.

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