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LAS VEGAS, Nevada –- Strip casino giant MGM Mirage has been hit with a shareholder class action lawsuit over the company's falling stock price and financial issues covering the past two years.
The case was filed in U.S. District Court in Nevada by a national law firm on behalf of a shareholder named Robert Lowinger, but is seeking other shareholders to join into the case that will seek class action certification.
The lawsuit names MGM Mirage, former Chairman and Chief Executive Officer Terry Lanni, current Chairman and CEO Jim Murren, Chief Financial Officer Dan D'Arrigo and CityCenter CEO Bobby Baldwin as defendants.
The case covers shareholders who owned stock in MGM Mirage between Aug. 2, 2007, when the company's closing price on the New York Stock Exchange was $74.89, and March 5, when shares closed at $1.89.
On Wednesday, shares of MGM Mirage closed at $8.44, down 12 cents, or 1.4 percent.
During the lawsuit's time period MGM Mirage executives made positive statements about the company's revenues and earnings, according to the complaint.
However, during that same time, the complaint alleges that MGM Mirage put out a series of "false and misleading statements" concerning the company's liquidity and the prospects for CityCenter, the $8.5 billion Strip complex the company is developing with Dubai World.
The complaint also discloses that MGM Mirage executives and board members sold almost $91 million in company stock during the lawsuit's time period.
Among the executives listed in the lawsuit are Baldwin, who sold 502,962 shares of MGM Mirage stock between Aug. 30, 2007 and Dec. 14, 2007 for $43.84 million; Murren, who sold 200,000 shares between Sept. 4, 2007 and Dec. 6, 2007 for $17.47 million; Lanni, who sold 50,000 shares on Dec. 7, 2007 for $4.58 million; Senior Vice President Gary Jacobs, who sold 150,000 shares between Aug. 24, 2007 and Dec. 10, 2007 for $13.26 million; and board member Alexis Herman, a former U.S. Secretary of Labor, who sold 19,800 shares on Dec. 14, 2007 for $1.75 million.
"We have not been served with the lawsuit so I can't comment on it directly," MGM Mirage spokesman Alan Feldman said. "I can tell you that we have never made any false or misleading statements about our company's positions or CityCenter."
Earlier this year, MGM Mirage completed two complicated financial transactions covering CityCenter and the corporation.
MGM Mirage and Dubai World reached a new agreement that fully funded CityCenter, a move that kept the project, which had been on the brink of bankruptcy, alive and headed toward a scheduled opening in December.
The other move was a $2.6 billion corporate restructuring effort that resolved MGM Mirage's leveraging issues and helped the company avoid a bankruptcy filing.
MGM Mirage, as with much of the gaming industry, has been hampered by the sagging economy which has zapped gaming revenues for the past 18 months. In the second quarter, MGM Mirage suffered a $212.6 million loss.
"As the true facts about MGM Mirage and the CityCenter leaked into the market, the inflation in the price of MGM Mirage stock was removed, causing plaintiff and the members of the Class damages," according to a statement released by Coughlin Stoia Geller Rudman & Robbins, the law firm handling the case.
After the initial case was announced, at least three more similar class action lawsuits against MGM Mirage were announced Wednesday by national law firms.
In July, a similar class action case was filed against slot machine giant International Game Technology.
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