After contrasting the disparate frameworks used by the district and circuit courts in Citigroup, Part III suggests that an optimal approach may lie somewhere in the middle-a place where courts can still police proposed enforcement decrees for substantive unreasonableness at the margins while assuring that judges give significant deference to agencies’ discretionary decisions to settle enforcement actions on particular terms. Part III then encourages a different approach. Part II situates this recent judicial skepticism in a more familiar framework, arguing that these district judges are engaging in something akin to “hard look” review. It also touches on other recent cases where federal district judges have declined to approve similar enforcement proposals. It then explains how the Second Circuit, in reversing Judge Rakoff, set out a new standard of review that limits judicial oversight of proposed enforcement decrees. District Court Judge Jed Rakoff’s rejection of a proposed agreement between the SEC and Citigroup.
Part I examines recent judicial skepticism of proposed enforcement decrees, focusing on one especially notable example: U.S. “Whether the commission directed such a compelled transfer of property, or merely accepted it as a cure to its concerns about undisclosed criminal ownership interests at FBT, cannot be decided without further discovery,” he added.Given these recent shifts in the legal landscape, and considering that the judiciary’s role in reviewing proposed enforcement decrees is still unclear in most circuits, it’s worth asking how courts should best proceed when asked to approve enforcement decrees. Instead of completing or concluding its investigation of the ownership interests in FBT, the commission made favorable consideration of the application subject to lowering the amount of money the owners of FBT would receive for the property, thereby giving one private party, Wynn, a multimillion-dollar windfall at the expense of another private party, FBT,” wrote Kafker. It claims the regulator threatened to disadvantage Wynn’s licensing application if it didn’t comply. This was to assuage the regulator’s misplaced concerns about Lightbody, argues the lawsuit. That was the land’s assessed value if it had been restricted from hosting a casino. Recent judicial decisions have questioned whether such an opinion can meaningfully inform the security holders who vote on the. The first is the conclusory nature of fairness opinions, which commonly reveal little of the analysis underlying the advisor’s conclusion. Windfall for WynnįBT claims the MGC pressured Wynn Resorts in 2014 into reducing the price to $35 million. Recent judicial scrutiny of fairness opinions has focused on three issues. The judge in that case noted that there was nothing in Massachusetts law that prohibited a felon from profiting from the sale of an asset to a casino company, only from actual gaming operations. State prosecutors later sued FBT for fraud, alleging that two directors, Anthony Gattineri and Dustin DeNunzio, had attempted to conceal Lightbody’s ongoing stake.Īll three were indicted on federal fraud charges, but cleared in 2016. Massachusetts gaming law prohibits felons profiting from the casino industry.įTB maintained that convicted criminal Charles Lightbody had divested himself of his interest in the company a year before Wynn resorts came knocking. But the land only sold for $35 million.Ī year earlier, while the MGC was doing due diligence on Wynn Resorts, investigators became concerned that FBT was concealing a hidden director with alleged links to organized crime. Wynn agreed to purchase the land for $75 million if it won the licensing bid, which it did, in 2015.
#JUDICIAL SCRUTINY LICENSE#
In 2012, Wynn Resorts entered into a conditional agreement with FBT to buy the land, a contaminated former chemical plant on the Mystic River.Ī year earlier, state residents had voted to legalize casinos, and Wynn was fiercely contesting the sole East Massachusetts gaming license with Mohegan Sun. Kafker wrote that the nature of the commission’s regulatory action was “highly unusual.” Hidden Felon The suit was thrown out by the lower court last summer – wrongly, according to Justice Scott Kafker in an opinion released Monday. (Image: Boston Globe)Ī lawsuit brought by the former landowner, FBT Everett Realty, alleges the Massachusetts Gaming Commission (MGC) improperly coerced Wynn Resorts into reducing the plot’s purchase price by $40 million.
Charles A Lightbody, above, was a hidden director of FBT, but he and two directors were acquitted of fraud by a federal jury in 2016. Massachusetts’ Supreme Judicial Court has ordered a lower court to reexamine the circumstances surrounding Wynn Resorts’ purchase of the land on which the Encore Boston Harbor now stands.
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