Nevada Gaming Commission chairwoman Jennifer Togliatti sent billionaire Barry Diller’s application for a gaming license back to the Gaming Control Board “for further fact finding and investigation” Thursday, two weeks after the GCB recommended approval of Diller and his company, IAC, to hold close to 14%, the most of any shareholder, of MGM Resorts International stock.
The unusual move, according to Control Board chairman Brin Gibson, is the result of Department of Justice and Securities and Exchange Commission investigations into allegations that Diller, music mogul David Geffen, and Alexander von Furstenberg made “large bets” on Activision Blizzard Inc. shares in the days leading up to the video game company’s acquisition by Microsoft, the Wall Street Journal was first to report. The three men stand to realize $60 million in profit, the WSJ reported.
WSJ reported the Justice Department is “investigating whether any of the options trades violated insider-trading laws, the people familiar with the matter said. The Securities and Exchange Commission is separately conducting a civil insider-trading investigation, the people said.”
The Control Board recommended Diller’s approval on March 2. The stock trades in question were made on January 14.
“Here, the SEC subpoena of Diller was served on March 8th, I believe,” Gibson said. The Current was unable to locate a subpoena in federal court records. The SEC has authority, including subpoena power, to investigate companies and executives suspected of violating federal law.
“The matter was simply delayed. We expect no issues with respect to Mr. Diller’s application nor with IAC’s,” a spokesperson for Diller said via email.
Diller’s application is scheduled to come back before the Gaming Commission in April. His office did not respond to multiple requests for comment.
“The Commission’s action is a big deal, and it appears that Chair Togliatti is making something of a statement here,” says Richard Schuetz, a former California gaming regulator and frequent critic of Nevada gaming regulation. “Seems she is going old school and is trying to reassert the Nevada regulatory model as something that is to be respected.”
Togliatti invoked Regulation 2.020, which “delegates to the Chair the authority to issue preliminary rulings on scheduling, procedural, and evidentiary matters…” and NRS 463.2205, which says the Commission, if not satisfied “that an applicant approved by the Board is qualified to be licensed…” may conduct hearings concerning the qualifications of the applicant.
Togliatti said via email the continuance and referral to the GCB was “procedural.”
“We have steps to this process to ensure that regulators each step of the way have, to the best of our ability, all the relevant information related to suitability,” she said. “If something comes up for any particular applicant between the time of the board meeting and the commission meeting, our process should not be to gather information in the first instance at the commission meeting.”
She says she’s reserving judgment “until the Board does their follow-up.”
The Commission must take action within 120 days of the Board’s recommendation.
MGM Resorts International and Resorts World are two of the casino companies courting regulators in New York for gaming licenses in that state.
The Nevada Gaming Commission approved licenses for Resorts World Las Vegas and its president, Scott Sibella on Thursday.
Earlier this month Sibella told the Gaming Control Board a subpoena issued to him in a bankruptcy fraud case against high-roller Brandon Sattler has “been pulled back.” Sibella also told the Current the subpoena had been withdrawn.
According to court records and the plaintiff in the bankruptcy fraud case, Sibella’s deposition has been put on hold, and the subpoena remains in force.
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