UNITE HERE’s Las Vegas affiliate, the Culinary Workers Union, has called on the Securities and Exchange Commission (SEC) to require full disclosure of Deutsche Bank’s regulatory problems in Station Casinos Corp.’s registration for an Initial Public Offering (IPO), given gaming’s highly regulated nature.
(Cross-posted from Station Casinos IPO Dissected.)
According to the union’s letter to the SEC, Station Casinos did not disclose in its Oct. 13, 2015 filing that a major owner of the company – Deutsche Bank – is the subject of recent and ongoing criminal investigations in the US and has a subsidiary that pleaded guilty last spring to US criminal wire fraud. A subsidiary of Deutsche Bank owns 25 percent of Station Casinos LLC, owner of 19 Nevada casinos in the Las Vegas “locals market” and operator of two open Native American casinos.
Nevada Revised Statutes NRS463.0129 state: “The continued growth and success of gaming is dependent upon public confidence and trust…that gaming is free from criminal and corruptive elements.” Nevada Gaming Control Board Chairman A.G. Burnett told The Wall Street Journal in September that if you break federal law, you break Nevada gaming law. Burnett said in the interview, “When you violate U.S. federal law, we’re not going to let that harm our reputation.”
The German bank agreed this year to pay more than $2 billion in penalties to US and British authorities for its role in rigging global interest rates and is the subject of two unresolved US criminal investigations, including a widening probe into possible money laundering through the bank by Russian clients.
If regulators determine Deutsche Bank is unsuitable to own Nevada casinos, 25 percent of Station Casinos’ equity could be subject to sale on an unexpected timeline, potentially without regard to lock-up agreements or waiting periods. Nevada gaming authorities could also impose fines or other consequences on Station Casinos. Prospective shareholders have a right to complete information from the issuer to assess risks around this owner.
“We were surprised that Station did not disclose details in its filing about a growing controversy over how the corporate parent of a felon who paid more than $2 billion in fines after breaking federal law could continue to own their Nevada casinos,” said Maya Holmes, Culinary Union Research Director.
For a summary of the union’s letter to the SEC, see here.
For a list of examples of persons whose applications the Nevada Gaming Commission has denied, revoked or found unsuitable, see here.