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Las Vegas Sands Prevails in Securities Class Action

U.S. District Judge Andrew Gordon in a 45-page opinion Tuesday dismissed a key allegation against Las Vegas Sands and CEO Sheldon Adelson, which defeated a federal securities class action.

Lead plaintiff Frank J. Fosbre Jr. in 2010 filed a 122-page amended class action accusing Las Vegas Sands, Adelson and then-COO William P. Wiedner of lying to investors about business matters in Macau in order to prevent a bankruptcy filing during the Great Recession.

Las Vegas Sands at the time was laying the groundwork for its eventual Macau gaming operations.

A key component of the class action cited an Aug. 29, 2008, Bloomberg article.

Fosbre claimed the article “reports that Adelson and other Las Vegas Sands executives dismissed concerns that a slowing economy or restriction on visitors to Macau would impact Macau’s results.”

Fosbre said that is a misrepresentation that misled investors into thinking Las Vegas Sands was in better financial shape that it truly was at the time.

Gordon, though, said the article does not contain the claimed misrepresentation, and Fosbre provided no other evidence to support the claim.

“It is unclear why the plaintiff’s interrogatory responses refer to the Bloomberg article when simply reading it would show it did not contain the alleged misrepresentation,” Gordon wrote.

He said an amended complaint filed in 2010 only cites the Bloomberg article.

“The complaint did not identify any source other than the Bloomberg article for the alleged misrepresentation related to dismissing Macau concerns,” Gordon wrote.

In turn, Adelson, et al., filed a motion to dismiss claims based upon the alleged misrepresentation, saying “they did not make any misrepresentations, they did not act with scienter and the plaintiffs cannot show loss causation,” Gordon wrote.

Adelson, et al., also said “some statements are not actionable as forward-looking puffery.”

Fosbre said misrepresentation about Macau appear in other news articles, but Adelson, et al., say it’s too late for Fosbre to amend his complaint.

Gordon agreed, saying the “allegation would not have survived dismissal … without reference to the Bloomberg article because it would not have identified the when or where of the misrepresentation.”

In his response to the motion to dismiss, Fosbre cited a Las Vegas Review Journal article that quotes Adelson saying “our entire strategy avoids the possibility of an economic slowdown, a recession.”

But Gordon said Fosbre is “effectively attempting to amend” the complaint in his response to the motion for summary judgment.

Gordon said the deadline for amending the pleadings in the case expired long ago and Fosbre and the class had ample opportunity to amend the complaint to “correct or add allegations but were not diligent in doing so.”

“By pleading the way they did, the plaintiffs led both this court and the defendants to believe the alleged misrepresentation was in the Bloomberg article” and “perpetuated this understanding” in a second amended complaint.

Gordon said Fosbre and the class prejudiced Adelson, et al., “because discovery has closed and they never received an accurate indication of the basis for this allegation so that they could explore it during discovery.”

Fosbre accused Las Vegas Sands, Adelson and Wiedner of lying to artificially pump up the value of Las Vegas Sands shares from Aug. 2, 2007, through Nov. 5, 2008.

Fosbre said the class can prove loss causation via an expert and that Adelson and Wiedner each acted as control persons because of their positions within the firm.

“Plaintiffs are left with their interrogatory responses that the basis for the alleged misrepresentation … is the August 29 Bloomberg article,” Gordon wrote.

Gordon said Fosbre misled the court and Adelson, et al., to “believe the alleged misrepresentation was in the Bloomberg article.”

“Because the article does not contain any such misrepresentation, the defendants are entitled to summary judgment on this allegation,” Gordon said.

Gordon said there are no remaining claims in the matter, and notified both parties of the federal rules for appealing his decision.

The federal court on Wednesday closed the case.