Shareholders sue over probes facing Las Vegas Sands

By Steve Green

Friday, April 1, 2011 | 5:07 p.m.

Las Vegas Sands Corp. directors were hit with another shareholder lawsuit Friday, this one over allegations they exposed the company to costly investigations of its compliance with an anti-bribery law.

A shareholder "derivative" lawsuit was filed in federal court in Las Vegas against Chairman Sheldon Adelson, Chief Operating Officer Michael Leven and their fellow directors. In a derivative complaint, the shareholders try to force the company to sue its own directors to recover alleged damages from them for the benefit of the company.

A request for comment was placed with Las Vegas Sands.

The lawsuit involves allegations raised in a lawsuit by Sands' fired Macau executive Steven Jacobs, who claims he was fired after refusing to go along with demands that he engage in improper activity.

Sands insists Jacobs was let go for working on unauthorized deals and violations of company policy.

Jacobs' allegations also appear to be responsible for investigations in the United States by the Securities and Exchange Commission and the Justice Department of Las Vegas Sands' compliance with the Foreign Corrupt Practices Act (FCPA), an anti-bribery statute.

This week, Sands' subsidiary Sands China Ltd. revealed it's being investigated by the Hong Kong Securities and Futures Commission. The nature of that inquiry hasn't been revealed.

Friday's lawsuit asserted allegations against the directors of breach of fiduciary duty, abuse of control, waste of corporate assets and conspiracy. It was filed by Las Vegas attorney Joshua Reisman in behalf of four shareholders.

The suit targets "defendants' authorizations for Sands to conduct its business and operations in foreign countries, some of which are generally perceived as having less-developed legal and regulatory frameworks and/or cultures in which requests for improper payments are not discouraged, without installing and maintaining the internal controls and accounting systems necessary for Sands' compliance with the requirements of the FCPA."

"As a result, Sands has been exposed to and has become the subject of costly investigations," the shareholders complained. "Sands has been severely damaged by defendants' misconduct."

The lawsuit notes Sands' disclosure of the U.S. investigations caused its stock price to drop 6.3 percent in one day and that the company now faces unknown costs in dealing with the probes.

Friday's lawsuit is in addition to two 2010 shareholder lawsuits pending against the company in federal court in Las Vegas.

Those suits claim 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 as the company worked through liquidity and expansion issues.

The stock has since rebounded somewhat, closing Friday at $43.65, as the company has improved its balance sheet and is reporting strong revenue from its casinos in Asia.