Kazuo Okada failed to persuade a federal judge to halt a shareholders meeting Wynn Resorts Ltd. (WYNN:US) has scheduled for Feb. 22 to vote the Japanese billionaire off its board of directors.
U.S. District Judge James C. Mahan, at a hearing today in Las Vegas, denied Okada’s request for a preliminary injunction to prevent the meeting.
“I don’t think this solicitation is false and misleading,” Mahan said. “An injunction is an extreme remedy.”
Okada’s bid to block the shareholders’ vote was the latest front in his fight with Wynn Resorts Chairman and Chief Executive Officer Steve Wynn that burst into the open last year when Wynn Resorts accused Okada of making illegal payments to Philippine gaming regulators and forcibly redeemed his 20 percent stake in the company.
Okada claims Wynn Resorts’ Jan. 3 proxy statement calling for the shareholders meeting “was grotesquely slanted” and violated U.S. securities law by making false and misleading statements.
The judge said at the hearing that “an appropriate remedy would be a counter-solicitation. I’m troubled Mr. Okada didn’t submit a counter-solicitation.”
Marc Sonnenfeld, a lawyer for Okada, said after the hearing that they will assess their options.
“The company is very grateful the shareholders will be able to vote on such an important issue as to who should serve as a director,” Robert Shapiro, a lawyer for Wynn Resorts, said after hearing.
Okada, 70, is the chairman of Tokyo-based Universal Entertainment Corp. He helped Steve Wynn finance the casino operator that went public in October 2002 and was its largest individual shareholder until February of last year. He has said Steve Wynn wants him out because he opposed a $135 million gift to the University of Macau.
On Feb. 19, 2012, Wynn Resorts said it had redeemed Okada’s 20 percent stake in the company for a 10-year $1.9 billion promissory note, which Okada claims is $800 million less than what his shares were worth. Wynn Resorts argued Okada was “unsuitable” as a controlling shareholder of a licensed gaming business because of the alleged illegal payments.
Okada is fighting the redemption of his shares in Nevada state court, where Wynn Resorts has sued him for breaching his fiduciary duty as a board director.
In the federal court case, Okada is arguing that Wynn Resorts is misleading shareholders by claiming the investigation it commissioned by former FBI Director Louis Freeh into the alleged illegal payments was independent. Okada said the investigation was an “ambush” with a preordained outcome and was directed and controlled by Wynn Resorts’ management.
“As the solitary pillar of purported evidence substantiating the executive committee’s argument that Mr. Okada should be removed as a director, the truth of the Freeh report’s preparation is vitally important to the removal proposal,” Okada said.
The proxy statement also misleads shareholders about the “imperative” need to remove him so that the company can seek additional gaming licenses, Okada said. The urgency is contradicted by the company’s waiting for almost a year after it found him “unsuitable,” Okada said.
Wynn Resorts said in its Feb. 6 response to Okada’s request to block the shareholders’ meeting that he has engaged in a “litigation vendetta” against the company and that U.S. securities law doesn’t require Wynn Resorts to include in its proxy statement what “Okada believes, or says he believes, to be accurate.”
“Rather than acting as a director and pursuing Wynn Resorts’ interests, Mr. Okada has been behaving as an adversary, using his knowledge of the company from his years on the board to concoct spurious theories in an effort to harm Wynn Resorts and deflect attention from his own wrongful conduct,” the company said.
Okada’s alleged illegal payments to Philippine regulators has resulted in continuing investigations against him by the Nevada Gaming Control Board, the U.S. Justice Department and Federal Bureau of Investigation, the Securities and Exchange Commission, the Osaka Stock Exchange and the Philippine government, Wynn Resorts said.
Wynn Resorts will have no chance of obtaining the gaming licenses it is applying for in Pennsylvania and Massachusetts unless Okada is removed as a director, the company said.
Wynn Resorts said Feb. 4 that the Nevada Gaming Control Board had concluded an investigation of the University of Macau donation by Wynn Macau Ltd. and found that Okada’s allegations that the donation was improper were unfounded.
The case is Okada v. Wynn Resorts, 13-00136, U.S. District Court, District of Nevada (Las Vegas).
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