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The shareholders of the Las Vegas Sands Corporation filed another lawsuit in federal court recently for securities law violations. This is the second class-action suit filed against the company since May 24^th.

Shareholders are looking for restitution from the massive drop in the Las Vegas Sands stock from $144 per share in 2008 to less than $2 per share in 2009. Due to the struggling economy, investors have become disgruntled with the corporation and their business methods for attracting new customers.

There has not yet been a response from the Sands’ attorneys. The defendants in this lawsuit include:

• The Sands Corporation
• Chairman and CEO Sheldon Adelson
• President and COO William Weidner

These defendants are accused of making bogus statements regarding the organization’s prospects which resulted in an inflated stock price. The first suit was filed by O’Mara and O’Mara attorneys on behalf of Frank Fosbre Jr. The current suit was filed by attorneys from Bernstein Liebhard LLP and Mark Wray on behalf of Wendell and Shirley Combs.

Since 2009, the Sands have implemented a few capital raising exercises to compensate for the major loss. Also the company has opened the Las Vegas Sands’ mega resort in Singapore. These actions have increased the stock to $24 per share.

In a previous lawsuit occurring last year involving the same defendants over the same issues, the judge ruled in favor of the Sands Corporation and its members. The judge stated the attorneys for the shareholders failed to show any mismanagement by the board members of the Sands Corporation. Also, the attorneys didn’t present a breach in their financial duties.

Despite a lack of charges filed, Adelson used $1 billion of his own money to reunite the Sands Corporation. Also, since the board members acquired property in Macau, they helped boost the stock to $140 per share. These decisions in the short-term were extremely risky and could result in the collapse of the Sands Corporation; only time will tell.

The Sands has been a major player in the gaming industry for many years. Although expansion is always a positive trait, timing must accompany the decision to ensure financial success. Since several lawsuits continue to arise due to complaints from the shareholders, the Sands Corporation may in fact be mismanaged by their board of directors. In time the financial stability of the company will be clear as day.

The gaming industry’s big three, MGM Mirage, Sands and Wynn, saw a decline in their stock prices during the month of May. The previous month, the three corporations witnessed a wild and unexpected upswing due to a recovering economy. Luckily, these declines didn’t hurt local casino operators that are under the corporate umbrella or gaming equipment manufacturers.

In April 2010, all three organizations saw double digit jumps in stock prices. May 2010 brought about daily average decreases in stock prices. Applied Analysis, which records the average stock price of six major casinos, believes this occurred for three reasons:

1. Investor speculation of the large purchase of MGM Mirage’s stock
2. Sands restarting construction in Macau
3. The European financial crisis

The first reason is that investors speculated the purchase of a large portion of stock by a hedge fund. Paulson and Company, based out of New York, purchased 40 millions shares of MGM Mirage, making them the second largest shareholder of the company. This resulted in an increased pressure on pricing within the gaming industry.

The second reason is that the Las Vegas Sands restarted construction at the Cotai Strip in Macau. This project was halted for nearly 18 months. Finally the European financial crisis has significantly decreased travel to the United States and overall spending, especially in major casino resort areas. This has also resulted in flights being cut to Las Vegas from around the world.

Major casino area’s like Las Vegas and Atlantic City may take a much longer time to recover from the global financial crisis. The Aqueduct Racetrack in the New York City area may add table games. This would eliminate the need for area residents to go to Atlantic City. Also, casinos in Pennsylvania will also be offering table games as early as this summer. As a result, this will limit the need of residents to go to large casino areas.

On the other hand, many slot machine makers like International Game Technology, Bally Technologies and WMS Industries experienced a strong month of May with the average daily stocks improving by two percent overall.

Although casinos have taken a slight hit during the month of May, there is no doubt they will recover. Due to clever strategic moves by smaller competing casinos, the recovery process may be slower than desired. Major casino destinations have had their fair share of ups and downs, always coming out on top.