Wynn Resorts, Limited (NASDAQ:WYNN), chairman Steve Wynn’s lawsuit accusing short-seller Jim Chanos of defamation was thrown out by a federal judge in San Francisco. Wynn now has until Jan. 13 to revise and refile the lawsuit.
Steven Wynn sued Jim Chanos
As reported by us, Steve Wynn filed a slander suit in September against Jim Chanos over an alleged statement that Wynn violated the federal Foreign Corrupt Practices Act. According to a complaint filed by Wynn Resorts Ltd. in federal court in San Francisco, Chanos told an audience at an invitation-only event in Berkeley, Calif. that Wynn Resorts, Ltd. and its chairman had violated the U.S. FCPA.
Seeking unspecified compensatory and punitive damages, the lawsuit 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.”
However, recently Chanos, who heads New York-based Kynikos Associates LP, filed a motion to dismiss the slander case filed against him by Wynn Resorts and its chairman. In a motion, Chanos emphasized that Wynn Resorts and Mr. Wynn submitted a “cut-and-paste manipulation of the transcript” instead of the exact words spoken by the hedge fund manager.
Arnold & Porter LLP, the law firm representing Chanos, pointed out that he never said or implied that Wynn Resorts or its chairman violated the U.S. FCPA. The law firm maintained that Chanos merely responded to questions from the moderator about why he sold his stake in the Macau casino operator, which he said was because of the risk he perceived at that time under the FCPA and other aspects of how business is done in China.
Court throws out the defamation case
In its ruling Tuesday, a federal judge in San Francisco dismissed Wynn’s lawsuit and said Chanos’ remarks were protected speech and not slanderous. The U.S. District Judge William Orrick said: “It takes a significant inferential leap to conclude that Chanos’ general uncertainty about the questionable business methods in Macau equates to an assertion that Wynn violated the FCPA.”
Meanwhile, Macau casino stocks, including Wynn Macau Ltd., slumped Wednesday in Hong Kong trading following a report that China will start cracking down on illicit money channeled through the city’s casinos.
Following the court ruling, a spokesman for Wynn Resorts Ltd said the company intends to take advantage of the opportunity to revise and refile the lawsuit before Jan. 13.
Full ruling below (H/T Sam Antar and ActivistShorts.com)
Stephen Wynn & Wynn Resorts v James Chanos – Order Granting Motion to Dismiss by Sam E. Antar
