Plaintiffs: MGM execs cashed out prior to stock drop
Late last month the Nevada Supreme Court dismissed a lawsuit by two MGM shareholders who claimed that current and former officers and directors of the company took part in illegal insider trading.
Plaintiffs Charles Kim and Sanjay Israni say MGM withheld information about cost overruns at CityCenter in Las Vegas, which ultimately had a $9.2 billion price tag. They say that and other problems did not become public knowledge until early 2009, when the Las Vegas Sun published a story about the flawed Harmon tower, which was eventually deemed uninhabitable due to the danger of collapse. MGM has stated it is a total loss.
After those problems came to light, the value of MGM stock dropped, and the project almost forced the company to declare bankruptcy, the shareholders contend. But some officers and directors who knew of MGM Resorts’ financial woes unloaded their stock at “near all-time high profits, collectively reaping close to $81.5 million in proceeds,” the court brief filed on behalf Israni and Kim said, according to the Sun.
According to the court, the two were required to seek resolution from the company’s board of directors before filing suit.
