Chanos Comments About Macau Don’t Slander Wynn, Judge Says

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Hedge fund manager Jim Chanos, who has shorted Macau casino operators, can’t be sued by Steve Wynn for saying he’s worried about violations of U.S. anti-bribery laws in the Chinese gambling enclave.

Wynn’s lawsuit accusing Chanos of defamation was thrown out Tuesday in San Francisco by a federal judge who said the remarks were protected speech and not slanderous. Chanos made the comments at a symposium at the University of California at Berkeley, where he discussed his investment strategy and concerns about how casino operators might run afoul of the U.S. Foreign Corrupt Practices Act.

“It takes a significant inferential leap to conclude that Chanos’s general uncertainty about the questionable business methods in Macau equates to an assertion that Wynn violated the FCPA,” U.S. District Judge William Orrick said.

Macau casino stocks, including Wynn Macau Ltd., slumped Wednesday in Hong Kong trading after a report that China will start cracking down on illicit money channeled through the city’s casinos. The alleged illegal flow of money from China through Macau was one of the topics Chanos, president and founder of Kynikos Associates LP, discussed at Berkeley.

Wynn has until Jan. 13 to revise and refile his lawsuit. “We intend to take advantage of that opportunity,” said Michael Weaver, a spokesman for Wynn Resorts Ltd.

Wynn sued Chanos in September, saying that his company had been investigated by numerous gaming regulators and the U.S. Securities and Exchange Commission and that no government agency had found any reliable evidence of FCPA violations.

Chanos’s statement, that he “began to really get concerned about the risk I was taking with clients’ money under Foreign Corrupt Practices Act and a variety of other, you know, aspects of exactly how business is done there,” is not rendered false by any definitive proof Wynn didn’t violate the FCPA, according to the judge’s ruling.

The case is Wynn v. Chanos, 14-cv-04329, U.S. District Court, Northern District of California (San Francisco).