Sands settlement draws muted reaction on Wall Street; shares rise
Wall Street on Wednesday viewed Las Vegas Sands Corp.’s $47.4 million settlement with federal prosecutors to avoid criminal money laundering charges as something of a nonevent. Shares of the casino operator rose $1.41, or 2.58 percent, on the New York Stock Exchange to close at $55.98, the first day of trading after the settlement was announced late Tuesday.
Analysts told the investment community the payment was nothing more than a business decision by the company.
Essentially, Las Vegas Sands sent the U.S. government the amount of money it won from a high-stakes gambler who was later linked to international drug trafficking.
“We view the resolution of this investigation as a positive for Las Vegas Sands given the small amount,” RBC Capital Markets gaming analyst John Kempf told investors Wednesday. “It removes a slight overhang on shares.”
BofA Merrill Lynch gaming analyst Sean Kelley said in a research report Wednesday the anti-money laundering settlement was not material to Las Vegas Sands’ overall financial picture. The company grew profits 120 percent in the second quarter.
“We think the biggest positive is that due in part to the company’s full cooperation with authorities, it avoided any criminal charges for Las Vegas Sands or any of its current executives or management team,” Kelley told investors.
Las Vegas Sands is controlled by billionaire Sheldon Adelson and operates two casinos on the Strip and resorts in Macau, Singapore and Pennsylvania.
Meanwhile, the U.S. Attorney’s Office also praised the company’s cooperation in settling the matter. In a letter to the casino operator’s legal counsel, Assistant U.S. Attorney Kevin Rosenberg said the nonprosecution agreement was based in part on the company’s “voluntary and complete disclosure of the conduct, beginning in 2007 and continuing through the present.”
Rosenberg said Las Vegas Sands “extensively” cooperated with the Department of Justice, “including conducting an internal investigation, voluntarily making current and former employees available for interviews, making voluntary document disclosures, and making multiple presentations to the U.S. Attorney on the status and findings of the internal investigation.”
The inquiry stemmed from gambling activity by businessman Zhenli Ye Gon, a dual citizen of China and Mexico, who transferred more than $45 million to The Venetian between 2006 and 2007. Ye Gon now faces drug-trafficking charges in Mexico.
In the agreement signed Monday night with the U.S. Department of Justice, Las Vegas Sands accepted an assertion by prosecutors that the casino operator failed to alert authorities after Ye Gon made numerous large and suspicious deposits at The Venetian between 2006 and 2007.
Las Vegas Sands voluntarily agreed to send the money it collected from Ye Gon to federal prosecutors.
The money laundering investigation was not part of a current Justice Department and Securities and Exchange Commission investigation Las Vegas Sands is facing over potential violations of the Foreign Corrupt Practices Act.
Those charges were raised in a wrongful termination lawsuit filed by the former CEO of the company’s Macau casino operations. The case is pending trial in Clark County District Court.
Kelley said investors are hopeful the current matter will be resolved soon.
“The FCPA case remains outstanding and is the larger regulatory overhang, in our view,” Kelley said. “We think it’s encouraging that Las Vegas Sands has moved to settle this outstanding litigation, and we think a settlement on the FCPA could be a material positive for the stock, depending on the final terms and financial amount.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.
