In House - The FindLaw Corporate Counsel Blog

When Sexual Misconduct Costs a Company $2 Billion -- in a Day

Steve Wynn, the billionaire casino owner, knows something about high risks.

But he had no clue about how devastating his high risk behavior could be to his company. When allegations about his sexual misconduct became very public recently, Wynn Resorts lost $2 billion -- in a day.

That's how the market responds to stories that don't sell so well these days. In the Weinstein era, it is especially bad business to let sexual harassment go unchecked.

"This Distraction"

According to the Wall Street Journal, dozens of Wynn employees said Wynn had a pattern of sexual misconduct for decades. Two former employees of Wynn casinos said the company settled one harassment case for $7.5 million.

The report "sent Wynn resorts into a tailspin," plunging 6 percent by noon. It's market value closed that day down more than 10 percent -- a drop of over $2 billion.

Wynn denied the allegations and blamed his ex-wife for resurrecting old stories. He also resigned as finance chair of the Republican National Committee, saying "the work we are doing to make America a better place is too important to be impaired by this distraction."

The damage control wasn't working by the next business day, however.

Global Impact

Wynn felt the repercussions across the globe, where he had planned to developed the "world's largest gambling hub." The sex scandal has stalled those plans in Macau in southeast Asia.

Wynn Macau lost almost 5 percent of its value in Hong Kong, giving it the biggest two-day loss since 2014. The Asian enclave accounts for more than three-fourth's of Wynn's earnings.

The Gaming Inspection & Coordination Bureau, which regulates casino-licensing there, said it talked with Wynn management about the report. The agency wants to "make sure major shareholders, directors and key employees meet suitable qualifications," Bloomberg reported.

China treats some crimes, like sexual harassment, more seriously than the United States. Acting indecently or threatening a woman carries a sentence of up to five years, according to China Daily.

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