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Why Is Wynn Resorts Stock Soaring Today?

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Shares of Wynn Resorts (WYNN - Free Report) gained more than 8% in early morning trading hours Wednesday after the company announced that Steve Wynn has resigned from his position as CEO and chairman in the wake of a report alleging that the casino mogul engaged in decades of sexual misconduct.

The details of Wynn’s alleged misconduct were first published in a Wall Street Journal report last month. Dozens of current and former employees described accounts that the Journal said amounted to “a decades-long pattern of sexual misconduct.”

The report also revealed that Wynn once paid a $7.5 million settlement to a former manicurist at one of his resorts who claimed that Wynn pressured her into having sex with him. Wynn also allegedly pressured massage therapists to perform sex acts for $1,000 tips.

Wynn’s behavior was known by the staff at some of his properties, and employees at the spa would often make fake appointments in an effort to avoid contact with him, the WSJ said (also read: Wynn Resorts Stock Plunges After CEO Accused of Sexual Misconduct).

In statements issued after the original report, Wynn said that the idea that he ever assaulted any woman was “preposterous.” Nevertheless, the former CEO stepped down from his position as the Republican National Committee’s finance chief shortly after the Journal published its story.

The trading of Wynn Macau shares on the Hong Kong stock exchange were halted ahead of today’s announcement. In a company statement, Wynn again refused to admit any wrongdoing and instead blamed the “environment” created by the allegations.

“In the last couple of weeks, I have found myself the focus of an avalanche of negative publicity. As I have reflected upon the environment this has created—one in which a rush to judgment takes precedence over everything else, including the facts—I have reached the conclusion I cannot continue to be effective in my current roles,” Wynn said.

Wynn Resorts announced that the company’s current president, Matt Maddox, would be taking over as CEO immediately. Shares of the casino and resort operator fell nearly 19% in the immediate aftermath of the WSJ report, and even with today’s gains, the stock is more than 11% off its 52-week high.

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