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May 20, 2019

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Shareholders file another lawsuit against Las Vegas Sands Corp.

Another shareholder lawsuit was filed Wednesday in federal court in Las Vegas accusing Las Vegas Sands Corp. of securities law violations.

This is the second such suit seeking class-action status against Las Vegas Sands to be filed in that court since May 24.

Disgruntled investors are seeking to recover damages over a decline in the price of Las Vegas Sands stock from $144 in 2007 to less than $2 per share in early 2009.

After a series of capital-raising exercises and the opening of Las Vegas Sands’ megaresort in Singapore, the stock is now trading at about $24.

Las Vegas Sands’ attorneys have not yet responded to either suit.

In both cases, the defendants besides Las Vegas Sands are Chairman and CEO Sheldon Adelson and former board member and President and Chief Operating Officer William Weidner.

They’re accused of making false statements about the company’s prospects in 2007 that allegedly inflated the stock price.

The first suit was filed in behalf of shareholder Frank Fosbre Jr. by Reno attorneys William O’Mara and David O’Mara, whose firm is also involved in some of the shareholder suits filed against MGM Resorts International last summer.

Wednesday’s lawsuit was filed by attorneys with the New York firm Bernstein Liebhard LLP as well as Reno attorney Mark Wray. The plaintiffs in the new case are Wendell and Shirley Combs.

“Each of the defendants is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of Las Vegas Sands common stock by disseminating material false and misleading statements and/or concealing material adverse facts,” Wednesday’s suit charges.

Las Vegas Sands likely will vigorously defend itself in both cases, just as it did last year when it was victorious in Nevada state court litigation over some of the same issues.

Clark County District Court Judge Allan Earl in Las Vegas last year ruled attorneys for shareholders in three combined cases failed to show mismanagement by board members or that they breached their fiduciary duties; and said the shareholders didn’t show Adelson exerted undue influence on the other board members.

The state court lawsuits complained the board wasn’t really independent because of Adelson’s controlling interest in the company and that this lack of independence allowed mismanagement there and poor investment decisions to be made by the company — all to the detriment of shareholders.

But Earl noted Adelson helped rescue Las Vegas Sands by committing more than $1 billion of his personal fortune “to infuse desperately-needed capital” into the company.

Earl said in his ruling that the transactions in question involved reasonable business decisions made by the board members — the same board members who had helped steer the company into the lucrative Macau market and boost its stock price to more than $140.

“These decisions may well have brought the corporation to the brink of financial instability ... and in the short term can be viewed as near catastrophic,” the judge said in his ruling. “It is much too early to say if these investments in large building projects, particularly in the Asian Rim, do not in the future provide the economic stability to ensure the future success of Las Vegas Sands Corp. as a powerful worldwide entity.”

The decisions at issue, he said, “were part of the inherent risk taking which Las Vegas Sands Corp. made in trying to establish itself as the premier gaming company in the world.”

And the backdrop of the situation, Earl said, was “a deteriorating global economy that struck with such frightening speed and force that it engulfed nearly every major banking, investment and gaming company in the world.”

The judge noted that Adelson, in the transactions in which he infused capital into the company, obtained stock at market prices and that there were no allegations that any of the directors were conflicted because of personal benefits they could gain from any of their decisions.

“There was no fraud, self-dealing, short selling, golden parachute contracts, investment in junk bonds, wasting of corporate assets, fraudulent coverups, etcetera,” the judge wrote.

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