The Nevada Gaming Commission (NGC) has granted a two-year limited license to billionaire Barry Diller for his stake in MGM Resorts International, as Diller continues to be investigated by the Securities and Exchange Commission (SEC) for insider trading.
The NGC approved the license by a 4-1 vote, after a two-hour hearing that was broadcasted online. NGC Commissioner Ogonna Brown was the sole vote in opposition to the license limitations, and she argued during the hearing that the Commission could always take action after the investigation concludes.
The NGC also ruled, however, that Diller would be eligible to petition for full licensing should he be cleared of any wrongdoing.
Diller and fellow investors Alex von Furstenberg and David Geffen are currently under investigation after acquiring significant shares in the video game developer Activision Blizzard just days before the company was purchased for $68.7 billion by Microsoft. The trade resulted in an unrealized profit of just under $60 million for the trio, and details of the transaction were first reported by the Wall Street Journal. The news broke shortly after the Nevada Gaming Control Board (NGCB) had recommended an unconditional license for Diller.
In addition to the civil investigation being conducted by the SEC, the Journal reported that the federal Justice Department has also launched a criminal probe regarding the potential breach of insider-trading laws by Diller and company.
At one point during the licensing hearing, Brown told Chairwoman Jennifer Togliatti, who was participating virtually, that Diller had shouted “That’s not fair!” from the audience.
With regards to the scrutinized trade, Diller was adamant in front of the Commission that it was all a case of “bad timing,” and that he immediately tried to void the deal once he realized the optics of it. At one point Diller said that he “didn’t wait until [he] was 80 years old to commit a fraud.”
Diller is the chairman of both the commerce conglomerate InterActiveCorp. (IAC) and the travel giant Expedia Group–IAC holds a 14 percent stake in MGM. Joey Levin, CEO of IAC, has already been granted an unconditional license.
When it came time to vote, NGC members were quick to point out that the two-year license was simply an act of prudence, and not an attack on Diller’s character. Shortly before casting his vote in favor of the limited license, Commissioner Steven Cohen said that he didn’t believe Diller would jeopardize his career in such a way, but right now “we don’t know what the future may bring.”
Representatives from MGM were adamantly opposed to the NGC’s ruling, arguing that it was heavy-handed for Diller given his clean reputation thus far. Patrick Madamba, legal counsel and senior vice president for MGM, argued during the hearing that Diller has yet to be accused or found guilty of any misconduct.
In response, Commission Rosa Solis-Rainey reiterated that while Diller has “been forthcoming and cooperative,” his ongoing investigation is not something that can be ignored. Solis-Rainey then concluded by saying that “a gaming license is a privilege.”
