HG Vora files lawsuit against Penn Entertainment over reduced election seats
Shareholders are claiming that, by reducing its number of seats up for election, this would also reduce the power they would have over the direction of the operator.
Key points:
– HG Vora is claiming Penn breached its fiduciary duties when it reduced the number of seats up for election from three to two
– The shareholder also alleges that Penn violated federal securities laws
– The lawsuit seeks declaratory and injunctive relief against Penn
HG Vora has launched a lawsuit against Penn Entertainment after one less seat became available during the election period.
On 28 April, HG Vora published a report on “Penn Entertainment’s Desperate Attempt to Disenfranchise Shareholders and Evade Accountability” after it reduced the number of seats up for election at its Annual Meeting of Shareholders from three to two.
The report continued to explain that HG Vora intended to nominate candidates “to restore accountability and proper oversight at Penn after years of poor judgment, failed transactions and value destructive actions.”
In HG Vora’s recent complaint, it further explains that this move from Penn is “a self-serving action with no legitimate corporate purpose” and that it “believes the Board’s manipulation of the Company’s election rules is an affront to shareholder democracy and only benefits its incumbent directors, notably its Chairman and CEO.”
The lawsuit was filed today at the Eastern District of Pennsylvania under Case No. 5:25-cv-2313 and explains that by reducing the number of seats, this would make it difficult for shareholders to control the direction of the company.
HG Vora went on to explain that on 18 December 2023, the company met with Penn CEO Jay Snowden to discuss HG Vora designating two independent directors following the “complete failure” of Penn’s “foray into the online sports betting world.”
However, Penn Entertainment allegedly took no action and following several adjustments to how it invested in the company, HG Vora notified Penn on 29 January 2025 that it would nominate “three independent individuals to serve as Class II members of the Board at the Annual Meeting: Johnny Hartnett, Carlos Ruisanchez, and William Clifford.”
Good to know: HG Vora has requested a jury trial with the damages amount to be determined later on in the process
The shareholder emphasises that it “is not seeking control of the company” and in its 16-year history, this is the first time that it has nominated director candidates at any of the hundreds of companies it invests in.
Penn subsequently published documents explaining the process of reducing its seats and has denied any wrongdoing, but HG Vora is seeking “declaratory and injunctive relief determining that Penn’s Board Reduction Scheme is invalid, that Penn must correct the materially false and misleading statements in its proxy materials, and that Penn must allow shareholders an opportunity to elect all three independent nominees proposed by HG Vora – William J. Clifford, Johnny Hartnett, and Carlos Ruisanchez – to the Board.”
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