BARROWAY TOPAZ KESSLER NIX PATTERSON & ROACH, LLP...

Case 2:09-cv-01558-GMN-LRL Document 94 Filed 01/14/11 of 106

BARROWAY TOPAZ KESSLER NIX PATTERSON & ROACH, LLPMELTZER & CHECK, LLP BRADLEY E. BECKWORTH

RAMZI ABADOU JEFFREY J. ANGELOVICHCHRISTOPHER L. NELSON SUSAN WHATLEYSTACEY M. KAPLAN BRAD E. SEIDELERIK D. PETERSON LISA BALDWIN580 California Street, Suite 1750 205 Linda DriveSan Francisco, CA 94104 Daingerfield, TX 75638Tel: 415/400-3000 Tel.: 903/645-7333Fax: 415/400-3001 Fax: 903/645-4415

ROBBINS GELLER RUDMAN& DOWD LLP

DARREN J. ROBBINSARTHUR C. LEAHYBRIAN O’MARA (Nevada Bar #8214)RYAN A. LLORENS655 West Broadway, Suite 1900San Diego, CA 92101Tel.: 619/231-1058Fax: 619/231-7423

Lead Counsel for Plaintiffs

[Additional counsel appear on signature page.]

UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA

In re MGM MIRAGE SECURITIES ) No. 2:09-cv-01558-GMN-LRLLITIGATION ) ) CLASS ACTION

)This Document Relates To: ) CONSOLIDATED COMPLAINT FOR

) VIOLATIONS OF FEDERAL SECURITIESALL ACTIONS. ) LAWS

)

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Lead Plaintiffs, Arkansas Teacher Retirement System (“Arkansas Teacher”), Philadelphia

Board of Pensions and Retirement (“Philadelphia”), Luzerne County Retirement System (“Luzerne”)

and Stichting Pensioenfonds Metaal en Techniek (“PMT”) (collectively “Lead Plaintiffs” or

“plaintiffs”) bring this securities fraud class action pursuant to the Securities Exchange Act of 1934

(the “Exchange Act”) against defendants MGM Mirage (now known as MGM Resorts International)

(“MGM” or the “Company”), J. Terrence Lanni (“Lanni”), James J. Murren (“Murren”), Daniel J.

D’Arrigo (“D’Arrigo”) and Robert C. Baldwin (“Baldwin”) (collectively, “Defendants”), on behalf

of themselves and all persons and entities who purchased or otherwise acquired the publicly traded

securities of MGM between August 2, 2007 and March 5, 2009, inclusive (the “Class” and “Class

Period”).

Lead Plaintiffs’ allegations are based upon the investigation conducted by Lead Plaintiffs’

counsel, which included a review of United States Securities and Exchange Commission (“SEC”)

filings made by MGM, statements by former employees of MGM and other third parties, as well as

governmental and regulatory filings and reports, securities analysts’ reports and advisories about the

Company, press releases and other public statements issued by the Company, and other public media

reports and legal documents about the Company. Lead Plaintiffs’ counsel believe that substantial

additional evidentiary support will exist for the allegations set forth herein after a reasonable

opportunity for discovery.

INTRODUCTION

1. In November 2004, MGM announced an ambitious plan to build CityCenter, the

largest privately developed construction project in the western hemisphere. MGM touted CityCenter

as a spectacular multi-billion dollar “city within a city,” consisting of numerous high rises including

a 4,000 room luxury hotel and casino, several 400-room, non-gaming hotels, 1,650 units of luxury

condominiums (later increased to 2,650 units), and 550,000 square feet of retail, dining and

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entertainment space. MGM later described CityCenter as a “luxury urban metropolis defined by its

dazzling vertical architecture.” The original construction budget for CityCenter was estimated to be

$4 billion and was scheduled to open in 2010. However, by the end of the Class Period, CityCenter

would prove much more costly to MGM – and its shareholders – than ever disclosed by Defendants.

In fact, MGM’s crown jewel project would prove to be a virtual black hole, bringing the Company to

the brink of bankruptcy and causing its investors to suffer massive losses.

2. By the start of the Class Period in August 2007, the credit crisis was rapidly gaining

momentum. Capital markets had contracted and, ultimately, would come close to a complete

standstill. Tight credit would have been material to MGM’s investors at any time because of its

effect on MGM’s ability to obtain financing. However, the credit crisis was of even greater

importance to MGM during the Class Period because MGM had embarked on a path that would

ultimately require it to spend over $9 billion to build CityCenter. MGM’s ability to fund and

complete CityCenter was equally important to Defendants. Indeed, unbeknownst to MGM’s

investors, the Company conducted internal risk assessments that ranked the CityCenter project as the

number one risk facing the Company.

3. Defendants initially responded to concerns about the possible impact of the credit

crisis by claiming that MGM was doing well financially, had the ability to raise capital from many

sources unaffected by the crisis, and that banks simply “loved” Defendants because they were “good

guys.” In the fall of 2007, MGM announced that it had entered into a joint venture with Dubai

World to fund the completion of CityCenter. Defendants claimed that Dubai World was like a

personal bank for MGM and that the alliance had “evaporate[d]” any concerns about MGM’s ability

to fund and complete the project.

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4. In reality, however, from the inception of the Class Period, MGM was in a precarious

financial position that grew more severe with every passing day. In addition to the increasing

negative impact the credit crisis was having on MGM, the CityCenter project was also spiraling out

of control. At the beginning of the Class Period, Defendants publicly announced a $7.4 billion

estimated cost for completion of the CityCenter project. Defendants’ reported cost of completion

was intentionally misleading. In addition, Defendants never finalized design plans for the project.

Instead, Defendants changed the design plans and material lists for CityCenter on an almost daily

basis during the Class Period. Moreover, MGM took the construction estimates it received for the

project and intentionally and unreasonably reduced them by at least 20%. In addition, MGM took

those understated estimates and then improperly slashed them by hundreds of millions more. That

is, MGM’s publicly announced estimates for the CityCenter project were knowingly understated by

at least 20% of the actual estimate provided to Defendants, and then improperly slashed by hundreds

of millions more. Defendants also knew, but failed to disclose, that the project was riddled with

construction defects and rising costs that grew more severe as the Class Period progressed.

5. For example, by at least the end of 2007 or the beginning of 2008, Defendants were

aware of substantial defects in several phases of CityCenter. By July 2008, Defendants knew of

dangerous structural defects in the Harmon Hotel building at CityCenter and had received over a

dozen citations from county inspectors. These defects were so severe that, after the Class Period,

Defendants announced that they planned to demolish the entire Harmon Hotel structure. Matters got

so bad for MGM that MGM came within a day of filing for bankruptcy protection during the Class

Period. Numerous MGM employees worked around the clock – sleeping on the floor in camping

gear – to prepare the Company for the filing. Although Defendants were fully aware of all of these

issues at all relevant times, they hid the truth from investors.

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6. When the truth was finally revealed, MGM’s stock price plummeted, investors were

badly damaged, and, like Lead Plaintiffs, MGM’s joint venture partner, Dubai World, filed suit

against MGM claiming, among other things, that Defendants had grossly underestimated the cost to

complete CityCenter and overstated MGM’s available financing, ability to obtain additional

financing and revenues, accusing the Company of making “misrepresentations” and exhibiting a lack

of candor.

STATEMENT OF THE CASE

7. In February 2006, MGM announced that its Board of Directors (“Board”) had

approved the design and budget for CityCenter. CityCenter’s general contractor, Perini Building

Company (“Perini”), and MGM broke ground on the project in 2006, although final designs and

contracts were not yet finalized and in place when construction began – a material fact Defendants

failed to disclose to investors. This was because MGM wanted the project completed as quickly as

possible while decisions were still being made about the specifics of the project. Moreover, MGM

instructed Perini to provide initial estimates for CityCenter based upon a lower scale hotel, although

MGM ultimately intended that CityCenter would be more upscale, similar to the Bellagio. The

contracts for the buildings that would comprise CityCenter – which were purportedly “guaranteed

maximum price” contracts – were not finalized until the end of 2007 and beginning of 2008.

However, the maximum prices in these contracts were “not really guaranteed” due to constant

“allowances,” which were the result of constant revisions and rush requests by MGM.

8. By the time construction commenced on CityCenter in 2006, the construction

estimate for CityCenter had risen to $7 billion, excluding pre-opening and land costs. By April

2007, MGM announced another increase in the construction budget for CityCenter, to $7.4 billion

(excluding land costs and pre-opening expenses), while also announcing that the scope of the project

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had increased by 670,000 square feet. MGM also announced that CityCenter was on schedule to

open in November 2009.

9. Not surprisingly, CityCenter’s massive, multi-billion dollar development cost was

highly material to MGM’s investors because (i) MGM was already carrying over 10 billion dollars

of debt on its balance sheet; and (ii) MGM touted the development as “transformational” for MGM

and its prospects. While CityCenter’s development and prospects may have seemed “dazzling” in

February 2006, by the start of the Class Period, on August 2, 2007, Defendants were caught in a bind

– either continue to tout misleadingly CityCenter or admit that MGM’s plan for a “city within a city”

was quickly crumbling due to skyrocketing costs and an unprecedented seizure in world credit

markets. Defendants chose the former.

10. Had Defendants chosen to disclose CityCenter’s problems during the Class Period,

investors and lenders would have likely abandoned the Company in droves, adding further pressure

to the Company’s already stressed liquidity position. So, instead of telling the truth, Defendants

misled the market about MGM’s ability to timely complete and finance CityCenter by repeatedly

representing, among other things, that the Company was “uniquely positioned” to withstand the

credit crisis that began in July 2007 and intensified throughout 2008 and 2009.

11. By the time the Class Period commenced in August 2007, while Defendants were

trumpeting “the ability for [MGM] to raise money in the bank market” and stating that MGM “could

do that today if we felt like it,” widespread concerns and red flags regarding subprime mortgage

losses and tightening credit markets were developing. Indeed, by this time, dozens of mortgage

companies had already halted operations and/or declared bankruptcy. Mortgage companies were not

the only ones feeling the crunch. For example, on June 23, 2007, Bear Stearns disclosed that it had

to pledge $3.2 billion to aid one of its ailing hedge funds due to bad bets on subprime mortgages. By

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July 18, 2007, Bears Stearns had announced that two of its hedge funds that had invested heavily in

the subprime market were essentially worthless, having lost over 90% of their value.

12. By August 2007, the worldwide credit crunch was in full swing as subprime

mortgage-backed securities were discovered in portfolios of banks and hedge funds around the

world, from BNP Paribas to Bank of China. Many lenders stopped offering home equity loans and

“stated income” loans at this time, and the Federal Reserve injected approximately $100 billion into

the money supply for banks to borrow at a low rate. MGM was feeling the crunch too. An AP news

report dated August 7, 2007 stated that “a tougher credit market has taken the air out of certain

stocks, including MGM Mirage, who is suffering in today’s volatile market.” Indeed, MGM’s stock

had dropped by approximately 16% since July 6, 2007.

13. As market conditions deteriorated, MGM looked far and wide for a desperately

needed capital infusion to meet CityCenter’s ballooning budget. On August 22, 2007, Defendants

announced they had found a source for the capital they needed so badly – Middle Eastern holding

company, Dubai World. Under the new joint venture between MGM and Dubai World, Dubai

World agreed to: (1) pay $2.7 billion for half of CityCenter, (2) buy up to $2.4 billion in MGM

stock, and (3) pay MGM a $100 million bonus if CityCenter was finished on budget and by late

2009. Defendant Lanni said the deal would reduce MGM’s debt by “about $6 billion.” This news

caused MGM’s shares to jump 8.9%.

14. MGM took advantage of this announcement, leading investors to believe that the

Company’s newly formed partnership with Dubai World effectively solved MGM’s financial

problems. Indeed, MGM stated unequivocally that the joint venture with Dubai World

“evaporate[d]” risks for MGM shareholders because Dubai World carried a higher credit rating and

the deal moved the balance of CityCenter’s construction off MGM’s balance sheet. Defendants

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described the joint venture as a “seminal event, absolutely transformational” for MGM. Just eight

days after Defendants trumpeted the partnership, on August 30, 2007, Baldwin unloaded over

200,000 shares of his MGM stock, at prices of approximately $82 to $83 per share – near the

Class Period high for MGM’s stock – realizing insider trading proceeds in excess of $17 million.

15. By the fourth quarter of 2007, more macroeconomic red flags surfaced, as dozens

more mortgage companies were closed, sold or bankrupted. On September 13 and October 16, 2007,

respectively, it was reported that Northern Rock Bank received an emergency loan from the Bank of

England, and that Citigroup began a string of major write-downs for subprime mortgage losses. On

November 29, 2007, The New York Times reported that “[c]redit flowing to American companies is

drying up at a pace not seen in decades, threatening the creation of jobs and the expansion of

businesses, while intensifying worries that the economy may be headed for a recession.”

16. Despite these mounting red flags at the time, Defendants continued to tell investors

that MGM was unaffected compared to others by these conditions. For example, Defendants told

investors that, “given [MGM’s] balance sheet, which is obviously uniquely strong in our industry

right now and our flexibility on capital, we feel very comfortable that we have all the flexibility that

we need” to finance CityCenter. Defendants further stated that “[w]e have a unique position here

with our great balance sheet and the fact that we have two extraordinarily well healed [sic], very

loyal and supportive partners in the form of Tracinda and Dubai World.”

17. Defendants’ misleading statements were designed to (and did) assuage investors’

concerns over the fact that Defendants had committed the Company to a massive construction

project, unprecedented in both cost and size, at a time when credit was drying up at record levels.

Rather than admit that MGM and its CityCenter project were in trouble – due to tight credit and

MGM’s desperate and increasing need for credit to complete CityCenter – Defendants repeatedly

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assured investors that CityCenter’s construction progress was on schedule and that MGM had the

ability to continue to finance CityCenter. Then, in December 2007, Defendant Baldwin suddenly

unloaded another 295,000 shares of his MGM common stock between December 11 and 14, 2007, at

prices between $89 and $92 per share – again near Class Period highs – reaping an additional $26

million in insider trading proceeds.

18. In January 2008, the credit crunch had worsened. On January 3, 2008, The Los

Angeles Times reported that “Federal Reserve officials worried last month that a credit crunch could

sharply brake economic growth . . . [and the] Fed lent $40 billion to banks through two auctions last

month and is set to hold two more such auctions this month. The central bank has said it will

continue the auctions if necessary to break logjams in credit markets.” Then, on January 11, 2008,

Merrill Lynch, the nation’s third-largest securities firm, announced that it would need to write down

more than double its initial projection related to subprime mortgage losses. Initial projections

showed Merrill Lynch would lose around $7 billion; however, it now appeared that number could

reach $15 billion. Bank of America, the nation’s second-largest banking institution, announced that

it would buy Countrywide Financial, the nation’s largest mortgage lender. This acquisition ended

days of speculation that Countrywide, due to its role in the proliferation of subprime mortgages,

would be forced to declare bankruptcy.

19. Shortly after these announcements, in February 2008, Defendants again reassured

investors that MGM would “continue moving forward on substantial growth initiatives” and that

MGM was “financially well positioned to carry out planned growth initiatives . . . while at the

same time maintaining a strong balance sheet.” Moreover, MGM led investors to believe it was in

control of these macroeconomic conditions, stating “[w]e are well aware of what’s happening in the

economy. . . . We’re well prepared to handle these challenges.”

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20. Throughout the spring and summer of 2008, Defendants continued to mislead

investors regarding MGM’s capital position and financing opportunities, and knowingly understating

CityCenter’s rising construction costs. Defendants also went to great lengths to attempt to

distinguish MGM from its competitors, stating that “we are [a] capital-intensive business, and we

think we can out-think our competitors in that area.”

21. By June 2008, MGM also knew, but failed to disclose, that serious problems were

plaguing the construction of CityCenter. These problems would not begin to be revealed until

January 2009 – and then only partially and locally – when the Las Vegas Sun released an article

entitled “How did CityCenter tower flaws persist?” This article disclosed numerous problems and

construction defects with CityCenter that MGM knew, but had concealed from the public, including:

• Clark County, Nevada was investigating the consultants hired by MGM to inspect thestructural integrity of construction work at the site, after faulty rebar caused massiveproblems in CityCenter’s Harmon tower;

• Ron Lynn, Clark County’s director of development services, stated that engineeringconsulting firm Converse Consultants repeatedly filed rebar inspection reports indicatingthere were no problems with The Harmon Tower. However, an employee of the tower’sengineer of record, Halcrow Yolles, discovered rebar deficiencies while walking the sitein July [2008]. By that point, much of the reinforcing iron had been buried in concrete;and

• Those concerns prompted a more detailed county inspection that halted construction onCityCenter and led to the decision by MGM to top off the building – originally plannedas a 49-story tower – at 28 floors.

22. Hence, by July 2008, Defendants knew that Clark County inspectors had issued

numerous Notices of Violation to MGM between July 2008 and September 2008 – including one

Notice on August 5, 2008, that stated “[i]t has been found, in the field, that the link beams

reinforcing has severely deficient items, such as reinforcing torch cut, misaligned and missing cap

ties . . . on floors 5 through 20.” These facts were not disclosed to investors. According to former

MGM employees, Defendants actually knew of these issues as early as June 2008. But, in an effort

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Case 2:09-cv-01558-GMN-LRL Document 94 Filed 01/14/11 Page 1 1 of 106

to maintain the Company’s artificially inflated stock price, Defendants failed to disclose any of these

facts. Furthermore, as alleged herein, MGM failed to disclose its scope changes to The Harmon

Tower at CityCenter until January 7, 2009 – nearly six months after the Company’s receipt of the

first Correction Notice on July 15, 2008.

23. By July 2008, the credit crisis had reached almost unprecedented levels: (i) Bear

Stearns reported a $15 billion (88%) drop in liquid assets; (ii) J.P. Morgan reported that it had

purchased Bear Stearns for $2 a share; and (iii) the FDIC seized Indymac Bank on July 11, 2008.

Defendants glossed over these mounting red flags and continued to make misleading representations

about MGM’s liquidity and ability to obtain additional financing for its mammoth CityCenter

project. Defendants’ false assurances were believed not only by investors, but also by analysts, who

continued to issue highly positive research reports on MGM’s prospects.

24. For example, in a July 14, 2008 report by Jefferies & Co. (“Jefferies”), entitled

“Reassurance From Mgt During Tough Market-Thoughts From Our Meeting,” Jefferies

maintained its “buy” rating and reiterated its $102 per share price target. At the time, MGM’s

common stock was trading at $23.68 per share, less than a quarter of Jefferies’ bullish price target.

According to Jefferies, “[management] was transparent on their [sic] outlook for the short and long-

term, and we believe MGM’s future remains bright.” In the report, Jefferies also noted that

management “believes investors will be ‘pleasantly surprised’ at the performance of many of its

properties.”

25. By August 2008, Defendants intensified the offensive, again touting the Company’s

“unique” ability to weather the full-blown credit crisis. On August 5, 2008, Defendant Lanni

claimed that MGM’s reported financial results were emblematic of the Company’s ability to

“successfully navigate” the challenging economic environment, while Defendant Baldwin falsely

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represented that CityCenter was on track, defensively responding to a question from an analyst by

stating “I said on the last call that everything is on schedule.” Defendant Lanni even represented

that the tightening credit markets were advantageous to MGM, stating “if you’re not fully financed

[like MGM] or have the balance sheets to do projects [like MGM], you’re just not going to do

anything over the next several years.”

26. These statements were grossly false and misleading because, at the time, Defendants

knew that CityCenter was not on schedule and that MGM was struggling to find additional financing

to complete CityCenter. Indeed, according to a former MGM employee who worked at the

Company during the Class Period, Defendant Baldwin held “weekly meetings” in his office every

Thursday to discuss the status of construction at CityCenter with personnel from MGM, Perini

(CityCenter’s general contractor), Tishman Construction (“Tishman”) (MGM’s general contractor

consultant) and Gensler (CityCenter’s architect). 1 At those meetings, all phases of CityCenter’s

plagued construction efforts were discussed, including building designs, revisions, scheduling and

cost increases. Moreover, by the summer of 2008, Defendant Baldwin was also aware of improperly

installed rebar at the Harmon Hotel located at CityCenter and the resulting inability to construct the

building to the full height as originally designed, as these issues were “heavily discussed” during the

weekly meetings during that time.

27. According to this same former MGM employee, Defendant Baldwin was directly

responsible for the significant cost increases to CityCenter’s construction estimates because he was

the “ultimate decision-maker” regarding all aspects of CityCenter. Baldwin was from the “design-

at-all-costs school of thought,” which led to late design submissions, revisions and cost increases.

1 This Confidential Witness is identified as CW 1 and is discussed more fully in ¶¶58-59, infra.

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Baldwin knew that CityCenter’s construction estimates throughout the Class Period were

significantly understated.

28. In addition to the numerous, undisclosed and material Notices of Violations regarding

CityCenter, a former MGM employee who worked on the CityCenter project stated that the publicly

announced construction costs throughout the Class Period for CityCenter were purposely

underestimated by Defendants. 2 While Perini (CityCenter’s general contractor) provided accurate

cost estimates to MGM, MGM reduced those estimates by 20% when formulating CityCenter’s

estimated construction costs. In fact, MGM’s construction estimates were underestimated from

CityCenter’s inception because the design drawings for the project were not completed and the exact

quantity and grade of materials was not known to Perini when it made its initial bids (the bids on

which MGM’s estimates were based). After Perini submitted its bids, MGM changed the designs,

increasing the quantity, grade and price of materials required, thereby increasing the construction

costs. Yet MGM never disclosed these highly material facts to investors.

29. As 2008 ended and 2009 began, Defendants could no longer credibly maintain their

scheme. As the construction delays and blunders surrounding CityCenter mounted, and the

deterioration of MGM’s financial condition and the U.S. economy spiraled downward, MGM was

forced to begin to disclose facts that caused unexpected, deep losses on investors. On January 7,

2009, the Defendants revealed that MGM would be able to meet its prior cost estimates for the

CityCenter project, but only at the cost of dropping The Harmon residential condominium

component and delaying the opening of The Harmon Hotel & Spa. Not surprisingly, the market

drove down the price of the Company’s common stock.

2 This Confidential Witness is identified as CW3 and is discussed more fully in 1[1[62-63,88(a)(ii), infra.

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30. In a January 9, 2009 press release on Form 8-K, MGM disclosed that it would

“recognize a non-cash impairment charge of approximately $1.2 billion related to goodwill and

certain indefinite-lived intangible assets in the fourth quarter of 2008.” MGM further disclosed that

“[t]he impairment charge resulted from factors impacted by current market conditions,” including,

inter alia, “higher discount rates resulting from turmoil in the credit and equity markets” and

“current cash flow forecasts for the affected resorts.” In response to this news, the Company’s stock

price declined 6.36% on heavy volume.

31. More troubling news surfaced on February 3, 2009, when Moody’s Investors Service

(“Moody’s”) downgraded MGM’s credit rating to B1 from Ba3, indicating that the Company’s

ratings remained on review for further possible downgrades. Moody’s cited several reasons for the

downgrade, including: (1) “the probability that earnings in 2009 will fall more than previously

expected,” (2) MGM’s failure to “‘raise the targeted $3.0 billion in capital for its CityCenter

development,’” and its increasing cash needs as a result, (3) MGM’s debt/EBITDA level was

“ ‘inconsistent with its prior rating,’” (4) “MGM’s liquidity remains weak,” and (5) the possibility

that “availability under the company’s $4.5 billion revolving credit facility could drop below $300

million by year-end,” which would be “insufficient to cover maturing bond debt of $1.1 billion in

2010.” In response to this news, the price of MGM’s stock fell 14.51% to $6.95 per share on

extremely heavy volume of more than 7.7 million shares traded.

32. Shortly thereafter, in a February 27, 2009 press release, MGM disclosed that it had

“submitted a request to borrow $842 million under its $4.5 billion senior revolving credit facility,

which amount represented, after giving effect to $93 million in outstanding letters of credit, the total

amount of unused borrowing capacity available under its $7.0 billion senior creditfacility.” The

Company also conceded that MGM’s borrowing request “was made in light of the continuing

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instability in the capital markets and uncertain state of the global economy.” MGM could no

longer credibly deny the reality of its dire financial condition.

33. Nevertheless, Defendants still continued to hide material facts surrounding

CityCenter and its rapidly deteriorating financial condition. In fact, according to a former MGM

Director of Construction Management and Finance for CityCenter who worked at the Company

during the Class Period, in February 2009, MGM had been secretly planning to shut down the

entire CityCenter project because of lack of funds to finance the project . 3 According to this

witness, MGM was planning to file for bankruptcy protection at noon on February 27, 2009 had its

request to borrow the last $842 million on its credit facility been denied. A former MGM employee

who worked for the Company during the Class Period also recalled seeing MGM personnel around

this same time “lay[ing] out camping gear” and staying at the office until one or two in the morning

preparing the Company for bankruptcy. Yet, Defendants failed to disclose that MGM came within

one day of declaring bankruptcy for another week. During that week-long period, MGM’s stock

price crashed 46%.

34. By March 3, 2009, things at MGM had, from the market’s perspective, unexpectedly

worsened. That day, MGM was forced to finally admit that severe liquidity problems prevented the

Company from timely filing its Annual Report on Form 10-K with the SEC. The Company also

disclosed that it “could” default under its senior credit facility as a result of its potential

noncompliance with the financial covenants thereunder, and that it would seek a waiver or

amendment of such provisions. As the Company noted, however, if it was unable to negotiate such a

waiver or amendment, “a majority of the lenders under the senior credit facility could accelerate

3 This Confidential Witness is identified as CW3. See n.2, supra and ¶181.

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repayment of borrowings under the senior credit facility and, under certain circumstances, cross

defaults could be triggered under the [Company’s] other debt instruments.” Finally, MGM

stunningly disclosed that its financial statements for the year ended 2008 could contain a “ going

concern” qualification as a result of doubt concerning its ability to continue as a viable entity.

35. On March 4, 2009, the Las Vegas Review-Journal reported that MGM “could be

facing a bankruptcy filing if it can’t renegotiate better repayment terms with its lenders covering

some $7 billion in loans.” The article also reported that a default under the senior secured credit

facility “could filter down and put all of MGM Mirage’s debt, which totals roughly $13.5 billion,

into default.” The article further reported that “Wall Street has begun speculating that MGM Mirage

might have to file for Chapter 11 bankruptcy protection to force a restructuring of its bank loans and

corporate debt.”

36. By March 5, 2009, the last day of the Class Period, the market finally digested the full

truth about Defendants’ scheme. That day, Janney Montgomery Scott LLC (“Janney”) issued a

report disclosing that the “cost overruns at . . . City Center . . . have the company suffering from a

significant debt burden that it may not be able to overcome” and that the project “has seen its cost

rise to a point that it could have potentially bankrupted the company.”

37. The same day, Macquarie Research (“Macquarie”) issued a note downgrading the

Company and, ironically, distinguishing MGM’s “malaise” from other gaming companies:

“Although MGM’s malaise is unfortunate and will continue to cast a shadow over the entire sector,

we stress that not every company is built alike. We believe that regional gaming operators such as

Penn . . . and Ameristar . . . are doing quite well [and] while Wynn . . . faces many of the same

challenges as MGM ... its balance sheet is significantly better . . . .” This news caused a nearly

14.48% drop in MGM’s stock price on March 5, 2009.

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38. Following the Class Period, MGM was unceremoniously sued by its championed

joint venture partner, Dubai World (through its subsidiary Infinity World Development Corporation

(“Infinity”)). On March 22, 2009, Infinity commenced an action against MGM in the Delaware

Court of Chancery alleging that MGM had breached the terms of their joint venture agreement.

Ironically, only five days before the Dubai World lawsuit was filed, during MGM’s March 17, 2009

earnings conference call, Defendant Murren described the Company’s relationship with Dubai

World as “outstanding” and noted that it “has been since August of ’07 when we consummated the

joint venture.” Dubai World’s complaint painted a far different picture.

39. Dubai World’s complaint alleged that, during the Class Period, MGM made

“misrepresentations and [exhibited a] lack of candor regarding its financial well-being” and

misrepresented the accuracy of CityCenter’s construction budget. The Dubai World complaint

further alleged that MGM grossly underestimated “costs, available financing, and project size[,]” as

well as its “estimates of revenue and EBITDA.”

JURISDICTION AND VENUE

40. The claims asserted herein arise under and pursuant to §§10(b) and 20(a) of the

Exchange Act, 15 U.S.C. §§78j(b) and 78t(a), and Rule 10b-5 promulgated thereunder by the SEC,

17 C.F.R. §240.10b-5.

41. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C.

§§1331 and 1337 and §27 of the Exchange Act, 15 U.S.C. §78aa.

42. Venue is proper in this District pursuant to §27 of the Exchange Act, and 28 U.S.C.

§1391(b). Certain of the acts charged herein, including the dissemination of materially false and

misleading information, occurred in this District. In addition, MGM’s principal executive offices are

located in this District.

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THE PARTIES

A. Lead Plaintiffs

43. Lead Plaintiff Arkansas Teacher, as set forth in the certification filed previously on

October 19, 2009, and as incorporated by reference herein, purchased MGM securities during the

Class Period and has been damaged thereby. Arkansas Teacher was established in 1937 to provide

retirement benefits for the employees of Arkansas’ education community and manages over $10

billion in assets. As a result of the conduct alleged herein, Arkansas Teacher lost approximately $3

million from its purchases of MGM securities during the Class Period.

44. Lead Plaintiff Philadelphia, as set forth in the certification filed previously on October

19, 2009, and as incorporated by reference herein, purchased MGM securities during the Class

Period and has been damaged thereby. Philadelphia is a public pension system that operates for the

benefit of active and retired police, fire and municipal workers of Philadelphia, Pennsylvania and

manages over $3 billion in assets. As a result of the conduct alleged herein, Philadelphia lost

approximately $1.4 million from its purchases of MGM securities during the Class Period.

45. Lead Plaintiff Luzerne, as set forth in the certification filed previously on October 19,

2009, and as incorporated by reference herein, purchased MGM securities during the Class Period

and has been damaged thereby. Luzerne is a public pension fund for the benefit of current and

former employees of Luzerne County, Pennsylvania and manages approximately $150 million in

assets. As a result of the conduct alleged herein, Luzerne lost approximately $273,655 from its

purchases of MGM securities during the Class Period.

46. Lead Plaintiff PMT, as set forth in the certification filed previously on October 19,

2009, and as incorporated by reference herein, purchased MGM Notes during the Class Period and

has been damaged thereby. PMT is the industry-wide pension fund for employees and employers in

the Dutch engineering, mechanical and electrical contracting industries. PMT is among the largest

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three pension funds in the Netherlands, where it manages and provides the pensions of over: 34,000

employers; 410,000 employees; 165,000 pensioners; and 640,000 former members/non-contributing

participants. As of October 2010, PMT had assets under management of 37.3 billion Euros. As a

result of the conduct alleged herein, PMT lost over $2 million from its purchases of MGM Notes

during the Class Period.

B. The Corporate Defendant

47. MGM is a Delaware corporation with its principal place of business at 3600 Las

Vegas Boulevard South, Las Vegas, Nevada 89109. MGM describes itself as one of the world’s

leading development companies with significant gaming and resort operations. MGM acts largely as

a holding company, as its operations are predominantly conducted through its wholly-owned

subsidiaries. The Company primarily owns and operates casino resorts, and offers gaming, hotel,

dining, entertainment, retail and other resort amenities. MGM’s common stock is publicly traded on

the New York Stock Exchange under the symbol “MGM.”

C. The Insider Defendants

48. Lanni served as MGM’s Chairman of the Board and Chief Executive Officer

(“CEO”) from the start of the Class Period through December 1, 2008, when, as a result of his

purportedly planned retirement, he was replaced by Defendant Murren. Lanni was a Board Member

throughout the Class Period. During the Class Period, Lanni made statements in Company press

releases and conference calls, as alleged herein, and signed and/or certified the Company’s SEC

filings, including but not limited to MGM’s Form(s) 10-Q and 10-K. Lanni has claimed to have

earned a bachelor’s degree in speech and general management and a master’s of business

administration degree in finance, both from the University of Southern California. Prior to joining

MGM in 1995, Lanni was a senior executive at Caesar’s World, Inc. for 18 years, including serving

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as President, Chief Financial Officer (“CFO”), Chief Operating Officer (“COO”), Treasurer and a

Board Member.

49. Murren served as MGM’s President, CFO, Treasurer and a Board Member from the

start of the Class Period until August 21, 2007. He served as President, COO and as a Board

Member from August 21, 2007 to December 1, 2008. From December 1, 2008 to present, Murren

has served as MGM’s Chairman and CEO. During the Class Period, Murren made statements in

Company press releases and conference calls, as alleged herein, and signed and/or certified the

Company’s SEC filings, including but not limited to MGM’s Form(s) 10-Q and 10-K. Prior to

joining MGM, Murren served as an Equity Analyst, Director of Research and Managing Director of

Deutsche Bank AG, Research Division.

50. D’Arrigo served as MGM’s Senior Vice President – Finance from the start of the

Class Period until August 21, 2007. D’Arrigo has served as Executive Vice President and CFO from

August 21, 2007 to present. During the Class Period, D’Arrigo made statements in Company press

releases and conference calls, as alleged herein, and signed and/or certified the Company’s SEC

filings, including but not limited to MGM’s Form(s) 10-Q and 10-K.

51. Baldwin served as President and CEO of Mirage Resorts, Inc. from June 1, 2000 to

August 21, 2007, after which he served as MGM’s Chief Design and Construction Officer. Baldwin

has also served as President of Project CC, LLC, as the managing member of CityCenter Holdings,

LLC, since March 2001, and as President and CEO of Project CC, LLC since August 2007. Having

not sold any MGM stock since early 2005, Defendant Baldwin sold over 500,000 of his MGM

shares during the Class Period for illicit insider trading proceeds of over $43.8 million. Defendant

Baldwin has not sold any stock since the end of the Class Period. During the Class Period, Baldwin

made statements in Company press releases and conference calls, as alleged herein.

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52. The Defendants referenced above in NN48-51 are referred to herein as the “Insider

Defendants.” The Insider Defendants together with MGM are referred to herein collectively as

“Defendants.”

53. Because of the Insider Defendants’ positions within the Company, they had access to

the adverse undisclosed information about its business, operations, projects, operational trends,

financial statements, markets and present and future business prospects via access to internal

corporate documents (including the Company’s operating plans, budgets, forecasts and reports of

actual operations compared thereto), conversations and connections with other corporate officers and

employees, attendance at management and Board meetings and committees thereof and via reports

and other information provided to them in connection therewith. Moreover, due to its size,

complexity and cost, MGM’s construction and financing of CityCenter was of paramount

importance to the Insider Defendants throughout the Class Period.

54. The Company’s press releases and SEC filings were group-published documents,

representing the collective actions of Company management. The Insider Defendants, by virtue of

their high-level positions within the Company, directly participated in the management of the

Company, were directly involved in the day-to-day operations of the Company at the highest levels,

and were privy to confidential proprietary information concerning the Company and its business,

operations, projects, growth, financial statements and financial condition, as alleged herein. The

Insider Defendants were involved in drafting, producing, reviewing and/or disseminating the false

and misleading statements and information alleged herein, were aware, or deliberately disregarded,

that false and misleading statements were being issued regarding the Company, and approved or

ratified these statements, in violation of the federal securities laws.

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55. The Insider Defendants, because of their positions of control and authority as officers

and/or directors of the Company, were able to and did control the content of the various SEC filings,

press releases and other public statements pertaining to the Company during the Class Period. Each

Insider Defendant was provided copies of the documents alleged herein to be misleading prior to or

shortly after their issuance and/or had the ability and/or opportunity to prevent their issuance or

cause them to be corrected. Accordingly, each Insider Defendant is responsible for the accuracy of

the public reports and releases detailed herein, and is therefore primarily liable for the

representations contained therein.

56. MGM and the Insider Defendants are liable as participants in a fraudulent scheme and

course of business that operated as a fraud or deceit on purchasers of MGM securities by

disseminating materially false and misleading statements and/or concealing adverse material facts.

The scheme: (i) deceived the investing public regarding MGM’s business, operations and

management and the intrinsic value of MGM securities; (ii) enabled MGM Insider Defendant

Baldwin to sell over 502,000 shares of his personally-held common stock for almost $44 million in

proceeds during the Class Period at unusual times and amounts while in possession of material

adverse non-public information about the Company; and (iv) caused Lead Plaintiffs and other

members of the Class to purchase MGM securities at artificially inflated prices.

57. Moreover, CityCenter was MGM’s largest and most expensive development in its

history. Indeed, CityCenter was the largest privately-developed project in the United States, and,

perhaps, the world. CityCenter required billions of dollars and countless hours to build. CityCenter

was MGM’s core operation and largest transaction before, during and after the Class Period. Given

CityCenter’s size and Defendants’ constant discussion of the project, the Insider Defendants were

well aware of all the facts concerning CityCenter alleged herein.

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CONFIDENTIAL WITNESSES

58. Confidential Witness 1 (“CW1”) served as Vice President of Global Sourcing for

MGM and worked on CityCenter from October 2007 until October 2010. CW1 was responsible for

hundreds of millions of dollars of the construction budget for CityCenter and reported to MGM

CityCenter Group CFO Chris Nordling (“Nordling”), who reported to Defendant Baldwin. CW1

states that Nordling was in regular communication with Defendant Baldwin about cost increases at

CityCenter. CW1 also advised both Nordling and Baldwin on budgets and actual expenses

associated with CityCenter. In addition, according to CW1, Defendant Baldwin personally called

and led “weekly construction update meetings” in Baldwin’s office in the business office for the

CityCenter project. The meetings occurred during the Class Period every Thursday morning at

either 8 a.m. or 10 a.m. and were scheduled to last for two hours, and always lasted at least “a solid

hour.”

59. CW1, Nordling, and the “top guys” from Perini, Tishman, and Gensler were among

the attendees. At these meetings, which were “operational in nature,” many topics were discussed,

including Nordling’s cost analyses, construction operations, building designs and scheduling

matters. The improperly installed rebar at the Harmon Hotel and the resulting inability to construct

the building to the full height as originally designed were “heavily discussed” in these meetings

beginning in the summer of 2008. CW1 stated that Defendant Baldwin was the ultimate “decision-

maker” about all aspects of CityCenter, and that he was responsible for the significant project cost

increases at CityCenter due to the delayed design submissions and revisions.

60. Confidential Witness 2 (“CW2”) served as a Cost Engineer for Perini – the general

contractor hired to build CityCenter – and worked on the City Center project from 2006 until

December 2008. As a Cost Engineer, CW2 was responsible for managing some of the construction

projects at CityCenter. CW2 also was responsible for the construction contracts between MGM and

- 22 -593341_1


Perini, as well as any change orders to those contracts. As a result of CW2’s position, CW2 was

aware of and had access to information concerning the construction contracts between MGM and

Perini, including the negotiations, timing and terms of the “guaranteed maximum price” contracts

entered into between MGM and Perini.

61. CW2 also worked directly with MGM personnel and MGM’s general contractor

consultant, Tishman, on pricing change orders and approval for those change orders from MGM. In

addition, CW2 attended monthly “Cost Report Review Meetings” with Tishman and MGM

executives where the change orders were reviewed and discussed. CW2 received minutes from

weekly “Project Meetings” attended by Perini and Tishman representatives and MGM’s architects,

wherein the rising impact on costs due to lack of designs was discussed.

62. Confidential Witness 3 (“CW3”) served as MGM’s Director of Construction

Management and Finance for CityCenter from January 2005 through January 2010. CW3’s

responsibilities included gathering and reporting information to senior MGM executives on the

CityCenter project, including pro forma cost reports, audit findings, due diligence reviews and

project controls schedules. CW3 reported, among other things, the project costs and problems that

arose in the construction process. CW3’s position enabled CW3 to observe that the design drawings

on CityCenter were constantly changing while construction was in progress, which negatively

impacted construction costs and schedules. CW3 was aware that, during the Class Period, senior

MGM executives, including Defendant Baldwin, received three “monthly progress reports” on the

25th of each month.

63. The reports were from Perini, Tishman and Converse Consultants (an engineering

consulting firm hired by MGM). The Perini reports detailed the project costs by contract and cost

segment, and provided information on the construction status, progress, problems and schedule

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delays. The Tishman reports essentially covered the same subjects, but served as a rebuttal to

Perini’s report. CW3 expressed the belief that MGM should have secured the financing to complete

CityCenter back in 2007 because by the time the Company finally obtained the financing, the

economy had already crashed, the value of the project had declined, financing was much harder to

get, and the construction costs were 20% higher than originally disclosed.

64. Confidential Witness 4 (“CW4”) served as a Design Project Manager from June 2007

through November 2008. CW4 worked in the MGM Mirage Design Group (“Design Group”),

which was responsible for remodels and renovations for MGM properties. The Design Group also

did work on CityCenter.

65. Confidential Witness 5 (“CW5”) served as MGM’s Corporate Director of Finance

Operations from December 2007 through April 2010. CW5 was responsible for examining the

Company’s EBITDA performance, conducting financial analyses on MGM’s Las Vegas Strip

properties and evaluating potential operating cost savings. CW5 reported to Cory Sanders

(“Sanders”) , MGM’s Executive Vice President of Operations, who reported to Defendant Murren.

CW5 was privy to communications between Defendant Murren and other top MGM executives

regarding the Company’s finances, cash flow and whether or not MGM intended to declare

bankruptcy. CW5 was advised by Sanders that MGM was “within a day of declaring bankruptcy”

and that cash flow was “day to day” during the Class Period.

66. Confidential Witness 6 (“CW6”) was employed by Tishman as a Director of Project

Controls for CityCenter from April 2007 until November 2008. Tishman was hired by MGM to

manage the construction of CityCenter for MGM, which included managing general contractor

Perini. CW6 was responsible for construction cost forecasting for CityCenter. CW6 collected cost

forecasts from all projects within CityCenter and consolidated them all into a construction cost

- 24 -593341_1


forecast for the entire CityCenter project. CW6 attended monthly meetings during the Class Period

where the consolidated forecasts CW6 created were distributed to personnel from MGM and

Tishman and were discussed. CW6 was familiar with the construction cost estimates for CityCenter

since that was CW6’s major job responsibility. In addition, CW6 had access to a software program

called Unifier (made by Skire), which MGM purchased and implemented for CityCenter. CW6,

other Tishman employees, MGM, Perini, and MGM’s architects, all had access to detailed

information on Unifier about cost forecasts, design changes, and other information related to the

construction of CityCenter. Unifier enabled Defendants to access and see the status of designs or

costs at any date and time.

67. Confidential Witness 7 (“CW7”) served as a Financial Analyst for MGM assigned to

CityCenter from late 2008 until April 2010. As a Financial Analyst, CW7 was responsible for

helping compile a budget of construction costs for CityCenter, dealing with bid packages from

subcontractors and processing change orders from contractors and subcontractors. CW7 attended

cost review meetings and individual project meetings in connection with CW7’s work. At the close

of these meetings, CW7 stated that certain figures were agreed upon. CW7 then reviewed and

compiled the figures discussed in the meeting. When the costs for the entire CityCenter project were

compiled, the figures were then provided to President of MGM Design Group and head of

construction for CityCenter, Bill Smith (“Smith”), CityCenter CFO Nordling and Defendant

Baldwin. According to CW7, once Smith and Nordling reviewed the budget figures, these

individuals then reduced the amounts by hundreds of millions of dollars.

68. Confidential Witness 8 (“CW8”) served as the lead Project Engineer on the “Podium”

portion of the Harmon Hotel at CityCenter for Perini from July 2006 to July 2008. As the lead

Project Engineer for the Podium (the low-rise portion of the Harmon that included the lobby, pool,

- 25 -593341_1


spa and retail), CW8 set up bid packages, reviewed construction/design work and ran meetings.

CW8 attended weekly team meetings every Wednesday at the CityCenter office. These meetings –

referred to as “OAC” meetings (owners, architect and consultants) – were attended by

representatives of MGM, Adamson Associates, Tishman, Perini and Halcrow Yolles. The topics

covered in these meetings included the status of the project, areas that needed immediate attention,

and changes to the project design.

69. CW8 stated that the design work on the Harmon was behind schedule. CW8 stated

that construction of the Podium was underway by July or August 2007, but that there were already

design issues by November 2007. Furthermore, concerns about the structural engineering at both the

Podium and the Tower began to surface in March 2008, when the steel work began. According to

CW8, these issues were raised in the weekly meetings beginning in March 2008. The full scope of

the Tower’s problems became apparent in June 2008, when, according to CW8, structural engineers

from Halcrow Yolles identified significant issues with the columns, which are used to hold up the

floors.

70. Then, according to CW8, everything “hit the fan” at a weekly OAC meeting in mid-

June 2008, after a walk-through of the Tower site by Halcrow Yolles, when serious problems with

the columns were discovered. The structural problems with the Tower were so serious, according to

CW8, that all work on the Tower was temporarily halted until Halcrow Yolles could investigate

further. CW8 also stated that Halcrow Yolles discovered that the “link beams” on certain floors of

the Tower were wrong and that the problems could cause the walls of the building to collapse. The

problems with the Tower became so severe that Halcrow Yolles eventually hired a company to x-ray

the Tower to determine if the structural problems existed throughout. The results of the x-ray

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revealed that the problems did exist throughout the Harmon Tower, which resulted in Perini losing

the contract for the Tower and turning it over to Tishman.

71. During CW8’s employment with Perini, CW8 received a total of 15 Non-Compliance

Reports (“NCR’s”) on the Podium by the Clark County building safety inspectors. Further, CW8

stated that the Tower received several NCR’s in the winter of 2007. County officials notified Perini

that if the 15 outstanding NCR’s on the Podium were not resolved immediately, the county would

shut down construction at the site. CW8 stated that county officials made this threat at least partially

because other projects within CityCenter had NCR’s that were unresolved and dated back two years.

72. Confidential Witness 9 (“CW9”) served as a Lead Project Manager for MGM from

2007 until January 2010. CW9 oversaw IT infrastructure projects, including the CityCenter project.

Based on CW9’s exposure to various CityCenter construction projects that were underway during

2007 and 2008, CW9 said the major cause of cost increases and slips in the construction schedule

was that “there were a lot of flaws in the implementation” by Perini, and as a result many projects

“had to be re-done.”

73. In addition, CW9 learned that MGM was having cash flow problems either in 3Q08

or 4Q08 and recalled being told during an IT Department meeting that “ things were getting bad” for

the Company, that there would be sizable layoffs, and that there would be no year-end bonuses for

the year. CW9 believed that MGM’s cash flow problems in this time frame resulted in part from the

increase in project costs on CityCenter. CW9 recalled that in early 2008, the “Harmon was

completely screwed.” CW9 also recalled that no significant steps were taken to address the concrete

problem at the Harmon in early 2008 when the problem was first discovered. CW9 first recalled

CityCenter’ s senior management beginning to look at the problem later in 2008, around the time that

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the City of Las Vegas issued the Notices of Violation regarding the Harmon (July 2008 through

September 2008).

74. Confidential Witness 10 (“CW10”) served as MGM Mirage Director of Internal Audit

from September 2006 through July 2008 and oversaw all operational audits of MGM’s existing

properties in Las Vegas and all Sarbanes-Oxley (“SOX”) audits, except for gaming operations and

the CityCenter project. After Defendant Murren took over as CEO for Defendant Lanni, CW10

stated that Murren implemented a plan to make significant cost reductions, including 10% payroll

reductions in all of the corporate office departments and smaller payroll deductions across all MGM

existing properties. According to CW10, the plan also included eliminating all capital improvement

projects at existing properties, including elimination of a major room remodel project at MGM.

About a month or two before CW10 left the Company in July 2008, CW10 learned that the

Company was looking to unload assets to generate cash and was looking for a buyer for Treasure

Island for that purpose.

75. CW10 interacted directly with Defendant D’Arrigo and knew that D’Arrigo was

heavily involved with the efforts to obtain bank financing to cover the funding gap for completing

CityCenter, and also worked closely with MGM’s partners at Dubai World on the financing. CW10

explained that a year-end SOX audit report and an “annual risk assessment” went to all of the Insider

Defendants and the Board early in the first quarter of each year. CW10 said that the annual risk

assessment reports included a list of the top 10 risks facing the Company as a whole. According to

CW10, the reports presented to the Insider Defendants and the Board in the first quarters of 2007 and

2008 both identified CityCenter as the number one risk to the Company. CW10 recalls that an

MGM Internal Audit Director said that a major reason for the construction problems and cost

increases on CityCenter was because it was an eight- to 10-year project that was contracted into a

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five-year timeline, and, because of this, everything on the project had to happen perfectly or else the

schedule would get thrown off and costs would increase significantly.

DEFENDANTS’ RECKLESS AND/OR KNOWING FALSEAND MISLEADING STATEMENTS AND OMISSIONS 4

76. By the time the Class Period began in August 2007, the credit markets were showing

serious signs of weakness and warning signs of serious trouble ahead. These external market

conditions initially began to cause deterioration in the market for subprime mortgages, but quickly

spread to a broad range of financial instruments and the general capital markets, causing greater

price declines and illiquidity. Despite the daily red flags that warned of this impending crisis, MGM

consciously chose to issue opaque and incomplete public disclosures, leading investors to believe

that MGM could continue to easily “raise money in the bank market” in order to finance and timely

complete its mammoth project – CityCenter. In reality, MGM was plodding along on a disastrous

course that would eventually lead the Company to the precipice of financial ruin.

77. On the first day of the Class Period, August 2, 2007, MGM issued a press release

announcing “record” financial results for its second fiscal quarter, and reiterated those statements

during an earnings conference call thereafter. In the August 2 press release, Murren gave MGM’s

investors a false picture of MGM’s financial health, as well as a false sense of the construction

progress at CityCenter: 5

“Our operating results this quarter once again prove the power of ourportfolio to generate consistent cash flows . . . . More exciting is the pace of future

4 All emphasis in this section is added unless otherwise noted.

5 The complete text of each press release and SEC filing referenced in this Complaint isincorporated as if set forth in its entirety.

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growth. We will continue to develop strategic relationships designed to createadditional value from our significant real estate portfolio. Of course, CityCenter isat the heart of our growth strategy; we are very pleased with the quality of thedevelopment and the pace of residential sales, and we continue on track for a late2009 opening.”

78. During the earnings conference call, Defendants reiterated the Company’s rosy

financial results and expounded on its prospects. In his opening remarks, Lanni represented that

MGM’s fundamentals were “clearly strong,” and tied those remarks to the Company’s hotel results

and cash flows. Lanni also noted that “construction is progressing nicely” at CityCenter, and that

the project was “on-budget and on-track” for a “late 2009 opening.”

79. Moreover, during the call, Murren represented that the Company had access to

sufficient financing to fund its portion of a joint venture with Kerzner International, making no

mention of the tightening credit markets or the possibility that those conditions might impact the

Company:

We put that in our pocket, and that $1.2 billion equity, of land and cashequity, we believe will be more than sufficient to raise the bank debt capital that weexpect will largely fund the project, and between Kerzner and MGM Mirage assponsors, the ability for us to raise money in the bank market is I don’t think, Idon’t think has any question. And we could do that today if we felt like it.

80. Even when specifically questioned by an analyst during the call whether “this

environment” (i. e., the tightening credit market) could possibly create risk or timing delays, Murren

stated that MGM’s joint venture partners were not exposed to the fluctuating credit markets:

[Felicia Hendrix, Analyst, Lehman Brothers:] Okay, that is great. Alongthose lines as we try to forecast, or think about future projects that you might dodomestically, given your experience, probably given the quality of the partners thatyou are going to be working with, even in light of this environment do you see risk or maybe timing delays, on any kind of future domestic JV projects you might havein the pipeline?

[Jim Murren:] Well the folks we are talking to, Felicia, are not looking atthe CMBS market. The folks we are talking to are very, very large strategicpartners, nongaming strategic partners. And other investors that are not dependent

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upon the day-to-day fluctuation of the credit markets. The work that we are doingwhich is constant, has not abated whatsoever in the past month.

81. Murren went even further when prompted by another analyst, stating that the

Company, as well as its prospective partners, were, by design, not beholden to the credit markets,

could accomplish additional projects without fear of a lack of financing, and that MGM was “lucky,”

“fortunate,” and “love[d]” by the banks:

[Jim Murren:] Well, we would like to say we planned perfectly for this day,and that we knew exactly what was going to happen in the credit markets over thepast 3 weeks, but of course we didn’t. But we did want to make sure that we hadenormous amount of financial flexibility going into 2007, because we knew we weregoing to spend about $3 billion this year.

That is why we were very active issuers of bonds through ‘06 throughout, andinto ‘07 and doing a large deal in the second quarter. That put us in the position thatwe are in today. Which means we are not dependent upon nor expect to be in thebond market at all this year, and probably won’t see the bond market until sometime next year, as I said we have substantial amount of bank capacity, and ourbanks love us. They should, we are good guys. We have a substantial relationshipwith our banks that is very productive on a going forward basis. Between our bankfacility, which is large, the largest in our industry, and our cash flows, we feel verycomfortable about our financial needs over the coming period of time.

From a standpoint of joint ventures, these joint ventures you know we haveput in the land as equity. We are getting cash back. If we do this a couple moretimes, which I expect that we will, we will get more cash back. These properties areunlevered. So when we go out and do deals, we are not the kind of joint venturepartner, that needs to access the CMBS market, or the bond market.

We go out and talk to our friends the banks, and we go out and dononrecourse bank deals, and they are lining up to do that with us even today. Sojoint ventures become immediately balance sheet positive, they provide us with aplatform to provide bank financing, and provide us with an opportunity to grow quiterapidly.

* * *

So I think we have got a little bit lucky in the sense that, there is a lot ofinterest in gaming from a variety of investors that we had not anticipated a year ago.We made some luck by buying land at the right time and buying companies at theright time. And we have been very, I think fortunate in our timing of accessing thecredit markets, so as to give us an awful lot of latitude and time, to see how thiswhole market shakes out.

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82. Defendants also emphasized the interest that various third-parties had in MGM, as

well as the fact that the Company had sufficient sources of capital available to finance additional

strategic ventures:

[Jim Murren:] [T]here is an enormous amount of demand from a variety ofsectors, on trying to partner up with us, whether that be passive money, insurancecompanies, pension money, and the financial segment, to other financial sponsors,whether it is PE money, or hedge funds, or otherwise, to the strategic side where wehave been very encouraged, and actually quite surprised about the quality and sizeof companies in the nongaming arena. But large companies nonetheless, that areinterested in perhaps partnering up with a company like MGM Mirage, given ourposition in the marketplace.

* * *

[Terrence Lanni:] A lot of people very frankly who want to invest with us, there area lot of people who want to work with us, and that is coming through very well.

* * *

[Jim Murren:] So the tables have turned a little bit, where we are gettingapproached by people that are more than willing to put up capital, and they seem tobe very successful once they do so, and it allows us to upgrade these properties at amuch lower cost to us.

83. The market responded to Defendants’ highly positive, yet false and misleading

statements, by sending MGM’s stock price up to $74.89 per share on August 2, 2007 – 3.58% higher

than the prior day’s closing price, on unusually high volume of nearly 4 million shares traded.

84. Analysts were also falsely assured by Defendants’ false and misleading statements.

Indeed, Bear Stearns issued a report the same day echoing Defendants’ reassurances about

CityCenter: “Progress continues on CityCenter without expected delays or increases in the

budget. We continue to expect completion in November 2009 and target a total cost of $7.4

billion. . . . Design development is complete on the project . . . .” Similarly, the following day,

August 3, 2007, Jefferies published a report, repeating Defendants’ representations that “MGM’s

$7.4-billion Project City Center is on track and is still scheduled to open in late 2009.”

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85. Moreover, as the market digested this information, the Company’s stock price

continued to rise over the next several days, increasing 1.23% to $75.81 per share, and 4.43% to

$77.80 per share, on August 3 and 7, 2007, respectively. MGM’s Notes also rose significantly in

price in the days following MGM’s positive August 2, 2007 announcement.

86. On or about August 9, 2007, MGM filed with the SEC its quarterly report on Form

10-Q for the second quarter ended June 30, 2007. In the report, the Company reaffirmed that “[t]he

overall construction costs of CityCenter is estimated at approximately $7.4 billion, excluding

preopening and land costs” and that the “net construction cost is estimated at approximately $4.7

billion.” MGM also reaffirmed that CityCenter was “expected to open in late 2009.”

87. Despite knowing that MGM’s statements in its second quarter 2007 Form 10-Q

regarding CityCenter’s construction costs were grossly understated, among other things, Insider

Defendants Lanni and Murren falsely certified, pursuant to §302 of SOX, inter alia, that the

Company’s second quarter Form 10-Q was free of material misstatements and that internal controls

over financial reporting provided reasonable assurances over the reliability of financial reporting.

Specifically, Lanni and Murren certified that they had personally reviewed MGM’s financial

statements, designed and evaluated MGM’s disclosure controls and evaluated MGM’s internal

controls over financial reporting. Moreover, Defendants Lanni and Murren certified that the

financial statements “[do] not contain any untrue statement of material fact or omit to state a material

fact necessary to make the statements made, in light of the circumstances under which such

statements were made, not misleading” and “fairly present in all material respects the financial

condition, results of operations and cash flows of [MGM].”

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88. Defendants’ statements on August 2 and 9, 2007 referenced above in ¶¶76-82, 84, 86-

87, were knowingly false and misleading when made because they failed to disclose and/or

misrepresented the following adverse facts, among others:

(a) Defendants knew the construction cost estimate for CityCenter of $7.4 billion

was grossly understated and MGM was not on budget, as corroborated by at least five confidential

witnesses:

i. According to CW 1, MGM’s constant design changes while construction

was already in progress led to constantly increasing construction costs.

The constant changes made it virtually impossible to estimate

construction costs as there was “no time to sit down and do really good

math on the costs” beforehand, according to CW 1. Moreover, Defendant

Baldwin was directly responsible for and aware of the significant cost

increases to CityCenter’s construction estimates because he was the

ultimate decision maker about all aspects of CityCenter. According to

CW 1, Baldwin was from the “design-at-all-costs school of thought”

which led to late design submissions, revisions and cost increases.

Because of this, Baldwin knew the construction estimate was too low,

and was actually much higher;

ii. According to CW3, MGM’s construction estimates were underestimated

from the very beginning of the project because the design drawings were

not completed and the exact quantity and grade of materials was not

known to Perini when it made its initial bids (the bids on which MGM’s

estimates were based). After Perini submitted its bids, MGM changed

- 34 -593341_1


the designs, increasing the quantity, grade and price of materials required,

thereby increasing the construction costs. Moreover, according to CW3,

the publicly announced construction costs for CityCenter were purposely

underestimated. This was so because, while Perini provided accurate cost

estimates to MGM, MGM and Tishman arbitrarily reduced those

estimates by 20% when formulating CityCenter’s estimated construction

costs to be reported to the public. The contracts for the buildings of

CityCenter – which were purportedly “guaranteed maximum price”

contracts – were not finalized until the end of 2007 and beginning of

2008. However, as revealed by CW2, the maximum prices in these

contracts were “not really guaranteed” due to constant “allowances” –

which were the result of constant revisions and rush requests by MGM;

iii. Moreover, according to CW6, MGM purposely directed that the

construction costs estimates for CityCenter be created in a way contrary

to the customary practices in the construction industry, which resulted in

intentionally underestimated costs. CW6 prepared reasonable cost

estimates for CityCenter which were higher than MGM’s publicly

reported estimates; as a result, CW6 was instructed by MGM executives

to lower CW6’s forecasts to the numbers MGM wanted;

iv. According to CW7, when CW7 submitted accurate, agreed-on costs

estimates for various CityCenter projects, Smith, President of MGM

Design Group and head of construction for CityCenter, always reduced

the amounts by hundreds of millions of dollars; and

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v. According to CW10, MGM conducted SOX audit reports and risk

assessment reports in the first quarter of 2007 and first quarter of 2008.

MGM’s risk assessment report listed the CityCenter project as the

number-one risk facing the Company.

(b) Because Defendants knew the publicly-announced construction cost estimate

for CityCenter of $7.4 billion was grossly understated as described in (a) above, Defendants also

knew that their public statements that the net construction cost for CityCenter would be $4.7 billion

was also understated;

(c) Defendants knew the Company would be unable to line up sufficient financing

to fund the CityCenter project, as a result of tightening credit markets. Moreover, Defendants knew

MGM’s prospects and financial condition were contingent on servicing the massive amounts of debt

that it had coming due and the continued prosperity of the Las Vegas market, which was beginning

to drastically weaken. And, Defendants knew MGM was not insulated from the deterioration in the

credit markets. Indeed, according to CW 10: (i) as of the first quarter of 2007 and 2008, CityCenter

was the number-one risk to the Company; (ii) CityCenter was problematic because it was an eight-

to 10-year project that was condensed into a five -year timeline;

(d) Defendants knew the construction progress on CityCenter was not on

schedule. In fact, according to CW1, Defendant Baldwin personally called and led “weekly

construction update meetings” in Baldwin’s office in the business office for the City Center project.

The meetings occurred during the Class Period every Thursday morning at either 8 a.m. or 10 a.m.

and always lasted at least “a solid hour.” CW 1 and the “top guys” from Perini, Tishman, and

Gensler were among the attendees. At these meetings, which were “operational in nature,” many

- 36 -593341_1


topics were discussed, including cost analyses, construction operations, building designs, and

scheduling matters;

(e) The design development phase for CityCenter was not complete. Rather,

CityCenter’s design was being drastically revised throughout the construction of the project.

According to CW 1, CityCenter was a “fast track” construction project, which meant that CityCenter

would be designed almost in real-time, resulting in designs and revisions being made as the project

was being built. According to CW2, a former Perini employee, final designs and contracts were not

yet in place when construction on CityCenter began;

(f) The constant design changes also resulted in already-built parts of the project

being removed and rebuilt according to the later updated designs. According to CW3, the design

drawings for CityCenter were regularly changing while construction was in progress, which

impacted the schedule and costs and led to subsequent changes and increases in the quantity, grade

and price of materials used to construct CityCenter. According to CW3, CityCenter was not

designed correctly, leading to construction problems because of circumstances the designers had not

thought of or anticipated, and which required Perini and its subcontractors to make changes in

construction to attempt to match the ill-conceived or revised designs. Furthermore, according to

CW4, the CityCenter contractors were building faster than MGM’s architects could design the

structures. As a result, MGM was losing money because Perini was “ripping out” what had already

been constructed once the designs were actually finalized. Defendants knew of these problems but

failed to disclose them; and

(g) The SOX certification in ¶87 was false and misleading because Insider

Defendants Lanni and Murren knowingly disregarded that (i) the second quarter Form 10-Q

contained numerous false and misleading statements relating to, or arising from, the Company’s

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understatement of construction costs for CityCenter; and (ii) that internal controls over financial

reporting were inadequate.

89. On August 22, 2007, MGM issued a press release announcing its formation of a

purported “long-term” relationship with Dubai World, a Middle Eastern investment holding

company that agreed to invest approximately $5 billion in MGM. Specifically, the investment was

to consist of: (i) a $2.7 billion investment in CityCenter, which would give Dubai World a 50%

interest in a holding company that owned CityCenter; and (ii) up to $2.4 billion in purchases of

MGM common stock, through a public tender offer and direct purchases from the Company at

$84.00 in cash per share, which would give Dubai World a 9.5% equity stake in the Company.

Under the agreement, MGM would be paid a $100 million bonus by Dubai World if CityCenter was

completed on time. Defendant Lanni touted the transaction, emphasizing the long-term nature and

importance of the newly-formed partnership:

“This is a transforming event for MGM MIRAGE and Las Vegas . . . . Thispartnership with Dubai World brings us a relationship with an internationally-respected developer of large-scale luxury properties that attract an internationalclientele. Dubai World’s proficiency in real estate, combined with our company’soperational expertise, strong brands and world-renowned resorts, creates competitiveadvantages that we believe will benefit all of our stakeholders. We are extremelypleased to be working with Dubai World. We have a tremendous amount of respectfor Sultan Bin Sulayem and all that his company has accomplished.”

“This transaction is immediately accretive to long term earnings and willhave a profound impact on our balance sheet. Dubai World is making a significantinvestment in our company that will greatly increase our growth and earnings. Wewelcome Dubai World’s long term commitment to our company through the jointventure and these share purchases . . . .”

90. The market was assured by this news, with the price of MGM common stock rising

8.91% to $80.94 per share on August 22, 2007 on extremely heavy volume of more than 8 million

shares. The stock price also rose 2.3%, to $82.80 per share, the following day. Many of MGM’s

Notes also increased in price. However, the true duration of the new partnership would prove short-

- 38 -593341_1


lived – Dubai World sued MGM for breach of contract just 18 months later, alleging that Defendants

made “misrepresentations and [exhibited a] lack of candor regarding its financial well-being.”

91. On the heels of Defendants’ August 2007 false and misleading statements, and after

MGM’s stock price jumped in reaction to those statements, on August 30, 2007, Insider Defendant

Baldwin sold over 200,000 shares of MGM stock, realizing insider trading proceeds in excess of

$17 million.

92. On October 1, 2007, MGM issued a press release announcing “several major

personnel changes and promotions” at the Company’s resorts “in preparation for the November 2009

opening of CityCenter, the company’s $7.4 billion mixed-use development on the Las Vegas Strip.”

With news that CityCenter’s opening was still purportedly on track and on budget, the price of

MGM’s stock increased 3.81% to $92.85 per share on volume of more than 2 million shares traded.

The stock price also rose 2.21%, to $94.90 per share, the following day. However, for the reasons

set forth in RR88(a)-(f), Defendants’ statements about CityCenter were false and misleading when

made.

93. As the credit markets continued to tighten, the good news kept flowing from MGM.

On October 30, 2007, MGM issued a press release announcing “record” financial results for its third

fiscal quarter. Commenting on the positive results and the Company’s “growth initiatives,” Lanni

stated:

“Our growth initiatives, including strategic relationships with Dubai Worldand Kerzner International, reflect our ability to leverage our tremendous assetsand creative energy to grow the Company . . . . Our all-new MGM Grand Detroit isthe clear market leader right out of the gate. We are well underway in creating themost important Las Vegas development ever, CityCenter . . .”

94. Insider Defendant D’ Arrigo also emphasized that the Company had ample access to

capital under its existing credit facility:

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“Our recent strategic transactions will have a profound impact on ourfinancial position and allow us to execute our many growth initiatives . . . .Following the transactions with Dubai World, we will have significant borrowingcapacity under our senior credit facility and no significant debt maturities in2008.”

95. Despite this barrage of good news and positive reassurance from Defendants, at the

same time, MGM also announced that the CityCenter “construction budget ha[d] increased from

$7.4 billion to $7.8 billion,” a material reported increase over the course of just three months.

96. Following the issuance of the press release, Defendants held MGM’s third quarter

earnings conference call with analysts and investors. During the call, Defendants reiterated the

Company’s positive financial results and expounded on its prospects. Specifically, Lanni focused on

MGM’s current financial condition and growth prospects, particularly with respect to CityCenter:

On CityCenter, we entered into a joint venture agreement with Dubai Worldfor 50% of CityCenter. It should be noted that we will continue to be the developerof that project. Once again, we will operate CityCenter, and we will receive amanagement fee for doing that. This transaction truly represents a paradigm in ourgrowth strategy. With us joining a strategic financial partner in Dubai World toleverage our management ability and real estate asset is the most effective waypossible that we could even think of.

97. At the same time, however, Lanni was forced to acknowledge rising construction

costs associated with CityCenter, although he attributed the increase to the complexity and quality of

the construction:

At CityCenter, the construction budget has increased as we noted todayapproximately $400 million, from $7.4 billion to $7.8 billion. It’s always our goal tobuild the finest and the best, and yes, the projects do tend to increase in cost, mayincrease in costs, but we want to be sure that that is an iconic structure at a series ofstructures. The cost increase is largely due to other factors, though – the complexityof the hotel casino podium, the fair buildings, and the Libeskind-designed roofstructure over the crystals retail area, which required additional steel, concrete andfabrication, along with additional design changes for exterior lighting and waterfeatures and site utility costs.

98. Lanni further falsely represented that “[c]onstruction has made substantial progress

during the third quarter” with respect to CityCenter and that its Harmon Residences located there

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were already on sale and would be opened to the public starting “in early 2008.” However, in

response to a separate question, he conceded that the $100 million bonus from Dubai World

associated with the timely completion of CityCenter was “in flux, but it’s certainly not off the table.”

99. In turn, D’Arrigo represented that MGM’s trends continued to remain strong, stating

that “[w]e also believe [that] our operating trends, nongaming revenues and operating margins will

remain strong.”

100. Murren also falsely stated that management had “very aggressively” managed

MGM’s balance sheet, and had identified capital investment opportunities:

We have been very aggressive acquirers of our stock. For example, in thepast, we have managed the balance sheet very aggressively and, I think, prudentlyfrom a standpoint of risk, and we’ve been able to plant some significantdevelopment seeds over time. So we’re going to go to our board once Terryapproves, first, of course, our budgets for ‘08. And we’re going to our board inJanuary. It would be a career-threatening move to give you numbers now before wepresent it to our board. But I would say that our opportunities are better thanthey’ve been before.

101. Also on October 30, 2007, Murren commented on Dubai’s Worlds’ recent investment

in CityCenter in a Reuters news article. Murren said the joint venture deal with Dubai World

“evaporate[d]” risks for MGM shareholders because Dubai World carried a higher credit rating and

the deal moved the balance of CityCenter’s construction off MGM’s balance sheet. These

statements were made as the credit crisis continued to intensify.

102. In addition to the reasons set forth above in 1[1[88(a)-(g), Defendants’ statements on

October 30, 2007 referenced above in 1[1[93-101 also were knowingly false and misleading when

made because they failed to disclose and/or misrepresented the following adverse facts, among

others:

(a) Defendants knew the revised construction estimate for CityCenter from $7.4

billion to $7.8 billion was still grossly and falsely understated. According to CW3, because the

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design drawings for CityCenter were not completed, it was not possible to formulate an accurate or

reasonable construction estimate because the exact quantity and grade of materials was not known.

Moreover, according to CW1, since CityCenter was a “fast-track” project, it was being designed

(and re-designed) in almost real-time as it was being constructed. The revised estimates were also

knowingly understated because MGM had directed that agreed-to accurate, higher estimates be

lowered by hundreds of millions of dollars, according to CW6 and CW7;

(b) Defendants knew the increase in the CityCenter budget from $7.4 billion to

$7.8 billion was not due solely to the complexity of the hotel casino podium, the fair buildings or the

roof structure, or the need for additional steel, concrete and fabrication as represented by Defendants.

Rather, the increase was due to the fact that MGM had arbitrarily slashed Perini’s bid by 20% of the

actual cost to construct CityCenter, and therefore, MGM was forced to continually raise the

construction cost estimate. However, Defendants failed to tell investors that they had lowered the

original bid and understated the estimated costs to the public;

(c) Defendants knowingly and/or recklessly managed MGM’s balance sheet by

unduly exposing the Company to an unreasonable degree of risk in connection with funding and

financing the CityCenter project at a time when Defendants knew the credit markets were tightening.

Indeed, according to CW 10: (i) as of the first quarter of 2007 and 2008, CityCenter was the number

one risk to the Company; (ii) CityCenter was problematic because it was an eight- to 10-year

project that was condensed into a five-year timeline;

(d) Defendants knew MGM’s past financial performance was not a reasonable

indicator of future trends in the industry; and

(e) Defendants knew Dubai World’s joint venture with MGM on CityCenter, and

Dubai World’s high credit rating, did not “evaporate” MGM shareholders’ risk, as Defendants

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stated. In fact, the prospects of obtaining the desired financing for CityCenter were diminishing as

the credit crunch expanded and deepened.

103. On December 6, 2007, Lanni once again touted MGM’s joint venture with Dubai

World in a MarketWatch news article. Lanni stated that MGM’s partnering with Dubai World was a

“ ‘seminal event, absolutely transformational’' for MGM and its shareholders. He also suggested

that the partnership opened a purse of virtually unlimited funds for MGM by stating: “ ‘we are

partnering with a bank.’' Lanni ranked the agreement as perhaps the biggest success of his decades

in the casino industry.

104. Defendants’ statements had their intended effect, as the Company’s stock price rose

over the next two days, increasing 2.74% to $87.86 per share, and 3.48% to $90.92 per share, on

December 5 and 6, 2007, respectively. As intended, Lanni’s positive comments had the effect of

assuring the market that the Company’s financial condition was strong and could endure the

increasing volatility and tightening of the credit markets.

105. Shortly thereafter, between December 11 and 14, 2007, Defendant Baldwin once

again took advantage of his access to non-public material information regarding MGM and sold

over 295,000 additional shares of his MGM common stock, reaping over $26 million in insider

trading proceeds.

106. Subsequently, on January 9, 2008, MGM released more good news, issuing a press

release announcing that it, together with an affiliate of Dubai World, would jointly make a cash

tender offer for up to 10 million shares of the Company’s common stock at a price per share of not

less than $75 and not greater than $80. In response, Jefferies issued a positive research report about

MGM, where it noted that the share purchases “should limit the downside on this stock.'

(Emphasis in original). Thus, once again, the market was assured that the Company’s financial

- 43 -593341_1


condition was strong, and Dubai World’s willingness to engage in the joint tender offer reinforced

that impression. On January 9, 2008, MGM’s stock price rose 5.44% to $73.79 per share on this

news, on heavy volume of nearly 4.4 million shares.

107. On February 7, 2008, MGM issued a press release announcing its preliminary results

for the fourth quarter 2007. The press release stated that fourth quarter results were “comparable to

the prior year” and that construction costs for CityCenter were once again rising:

“We experienced solid volumes in high-end gaming play led by a 17% increase inour baccarat volume during the fourth quarter, and achieved our 18th consecutiveincrease in REVPAR (revenue per available room) at our Las Vegas Stripresorts . . . . Overall, composite fourth quarter operating results at our Las VegasStrip resorts were comparable to the prior year. Our estimated earnings for themonth of January 2008 are a few cents per share below those achieved in the monthof January 2007, with estimated Las Vegas Strip REVPAR a few percent lower thanJanuary 2007.”

* * *

“We are still in the process of finalizing guaranteed maximum price [(“GMP”)]contracts with our general contractor for several elements of the project . . . .Based on the current status of these negotiations, we expect the construction costsof CityCenter to be $300 million to $600 million higher than our previous estimateof $7.8 billion.”

108. Then, on February 21, 2008, MGM issued a press release announcing “record”

financial results for the fourth quarter and full year 2007, which largely confirmed the preliminary

results that it had announced on February 7, 2008. Commenting on the results, Insider Defendants

Lanni, Murren and D’Arrigo all continued to highlight the Company’s positioning, prospects and

growth initiatives:

[Lanni:] “Even while closing on the most historic transaction in ourCompany’s history – the CityCenter joint venture and strategic relationship withDubai World – our dedicated employees delivered exceptional operating results . . . .Our Company is ideally positioned to excel domestically and internationally. Wehave the premier resorts in our markets and a focused management team, and wecontinue moving forward on substantial growth initiatives.”

* * *

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[Murren :] “In the fourth quarter, our overall business remained solid, and wecontinue to look for opportunities to maximize both customer volume and operatingmargins . . . . Our strategy of executing profitable targeted capital investments canbe seen across our resorts. Luxor now features an array of dining, nightclub andentertainment options, all opened within the past few months. Mandalay Bay has anentirely new standard room product. We believe our customers are verydiscriminating, and appreciate the difference in strategy between our company andour competitors – a difference which will likely only become more pronounced overtime.”

* * *

D’Arrigo: “Our Company is financially well positioned to carry out plannedgrowth initiatives, including reinvestment in our existing resorts, while at the sametime maintaining a strong balance sheet . . . . Our capital allocation strategyremains sound, and will allow us to prudently expand our brands both domesticallyand in international markets, while maximizing shareholder value.”

109. During the earnings conference call following the issuance of the press release,

Defendants reiterated the Company’s financial results and expounded on its prospects. In his

opening remarks, Lanni represented that the Company’s “industry-leading operating margins remain

very strong excluding, obviously, the items discussed in the [press] release.” He also stated that

“[a]s a result of continued revenue growth and stable margins, we earned record profits in each of

the four quarters last year.” Lanni further addressed the Company’s growth prospects, stating, in

pertinent part, as follows:

We entered into several new joint ventures and strategic partnerships withworld class organizations which will truly set this framework for near term andlong-term growth. Our future in this year 2008 and well beyond is very bright, andour management team will remain focused on expanding our operations domesticallyand internationally, and operating our existing resorts to maximize their appeal to ourvisitors.

110. Murren also spoke positively of MGM’s prospects and while acknowledging

challenging macroeconomic conditions, reassured investors that the Company could handily

withstand such conditions:

So on balance, we’re pleased with the fourth quarter results. We are wellaware of what’s happening in the economy. . . .

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We’re well prepared to handle these challenges. Certainly, more so than anyof our competitors here in Las Vegas or in the industry. And we feel like we havesome good momentum, particularly as the year progresses as we get into the thirdand fourth quarter.

111. Further, Defendant Baldwin represented that the development and construction of

CityCenter remained “on schedule”:

Update on CityCenter, construction continues and remains on schedule withan anticipated opening in late 2009. We currently have 5,600 construction workerson the site. The number of construction workers on the site is expected to peak laterthis summer and a total of 7,000. The hotel casino tower at CityCenter is expected totop out in September of this year. The concrete structure currently is up to level 36.

Drywall stud framing is ongoing through level 27, structural steel iscompleted in the west podium and 65% complete in the east podium, and 60%complete in the convention center. Vdara is expected to top out in August. Concretestructure is complete through level 42. Currently, curtain wall installation iscomplete to level 31. The Mandarin Oriental Tower is expected to top out inSeptember. Concrete’s through level 24 and curtain walls through level 15.

Concrete structure for the Veer Towers is complete through level 6 with onetower, at level 2 with the other while concrete decks have been placed through level4 at the Harmon Hotel. Structural steel for Crystals retail area is approximately80% complete. CityCenter residential sales update, despite a tightening housing andcredit environment that Jim’s been discussing we continue to be satisfied with ourresidential sales results.

In the fourth quarter, 97 units were sold for a total of $141 million. To date,we have now sold 1,336 units for over $1.67 billion with an average sales price of$1,269 per square foot. We’re also encouraged that we have not yet received anycontract rescissions as second deposits are now being received. This demonstratesthe high quality and financial stability of our customers.

112. In response to a question about CityCenter’s rising construction costs, Baldwin

attempted to alleviate concerns by representing that “ [a]s it relates to the construction costs for

CityCenter, we now have GMPs in our possession for about 72% of the project and 28% yet to be

under maximum pricing contracts. And that will – we’ll get that wrapped up in this quarter.”

113. Baldwin’s comments gave investors the false impression that, because MGM was

getting GMP contracts for all work at CityCenter, future construction cost increases would cease or

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be limited. This is because a GMP contract – or “guaranteed maximum price” contract – is designed

to “guarantee” or limit how much a contractor can charge for work regardless of the amount of the

ultimate, actual cost. In other words, if actual construction costs exceeded the GMP contract

amount, MGM was only required to pay up to the amount specified in the GMP contract, and the

contractor was required to absorb the remaining costs.

114. Commenting on the Company’s maturing debt and the capital available under its

senior credit facility, D’Arrigo also made positive statements during the February 21, 2008

conference call, stating, in pertinent part, as follows:

In February this year, 2008, we repaid $180 million of senior notes using our creditfacilities and have only approximately $200 million in maturities remaining this year,so that gives us a lot of financial flexibility in 2008. After giving effect to the recenttender, we have approximately $2.9 billion of availability under our senior creditfacility.

He also represented that “[o]ur larger resorts are faring much better than people give them credit”

and that “[p]re-opening expenses will be minimal in the quarter.”

115. During the question-and-answer session, Lanni continued to claim that the Company

was immune from market conditions, as a result of its balance sheet and “well healed[sic], very loyal

and supportive partners.” Specifically, he represented that, “ given our balance sheet, which is

obviously uniquely strong in our industry right now and our flexibility on capital, we feel very

comfortable that we have all the flexibility that we need.” He also represented that “[w]e have a

unique position here with our great balance sheet and the fact that we have two extraordinarily well

healed [sic], very loyal and supportive partners in the form of Tracinda and Dubai World. It afford

[sic] us many opportunities to look at any type of corporate structure in the future.”

116. On this news, the price of MGM common stock climbed a total of 4.6%, to $67.34

per share, during the three trading days thereafter (i.e., February 22, 25 and 26, 2008).

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117. In addition to the reasons set forth in ¶¶88(a)-(g) and 102(a)-(e) above, Defendants’

statements beginning on December 6, 2007 and continuing through February 21, 2008 referenced

above in ¶¶103, 106-112 and 114-115 were knowingly false and misleading when made because

they failed to disclose and/or misrepresented the following adverse facts, among others:

(a) Defendants knew the increased estimate of an additional $300 to $600 million

to construct CityCenter (increasing the total construction costs to $8.1-$8.4 billion, from $7.8

billion) was falsely understated. According to CW3, the design drawings for CityCenter were not

complete, making it impossible to formulate an accurate or reasonable estimate because the exact

quantity and grade of materials was not known. Moreover, according to CW 1, since CityCenter was

a “fast-track” project, CityCenter was being designed (and re-designed) in almost real-time as it was

being constructed;

(b) Defendants knew the increase in the CityCenter budget of $300-$600 million

was still understated because MGM had arbitrarily slashed estimates by 20% of the actual cost to

construct CityCenter, according to CW3. Moreover, Defendants also knew the increased CityCenter

construction estimate was still understated by hundreds of millions of additional dollars because

MGM had unreasonably and arbitrarily lowered agreed-on, higher, accurate estimates, according to

CW6 and CW7;

(c) Defendants knew the construction costs for CityCenter would continue to

increase because of Defendant Baldwin’s “design-at-all-costs” mentality wherein he considered high

design paramount to the cost to build CityCenter;

(d) Contrary to Defendant Baldwin’s statements, the GMP contracts on

CityCenter were “not really guaranteed” maximum price contracts, which would cap the

construction costs. In fact, the contracts contained various “allowances” for changes or rush orders

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if requested by MGM with respect to CityCenter’s construction. Therefore, no GMP existed, as such

changes could cause and did cause the cost to exceed the GMP of the contracts. According to CW2,

MGM was making so many change orders that it was necessarily increasing the cost of constructing

CityCenter;

(e) Defendants knew MGM did not have sufficient “financial flexibility” to

weather deteriorating economic conditions, because the availability of capital under MGM’s credit

facility was contingent on the Company’s financial results, which were vulnerable to an industry

slowdown;

(f) Defendants knew that rising costs associated with the CityCenter construction

would only continue to constrain the amount of capital available to MGM in the future. Indeed,

according to CW 10: (i) as of the first quarter of 2007 and 2008, CityCenter was the number one risk

to the Company; (ii) CityCenter was problematic because it was an eight- to 10-year project that

was condensed into a five-year timeline, and because of this, everything on the project had to

happen perfectly or else the schedule would get thrown off and costs would increase significantly;

and

(g) According to CW8, Defendants knew by November 2007 that CityCenter’s

development was already hampered by construction defects, particularly those affecting The

Harmon, whose scope and significance Defendants concealed from the market and which would

prevent that portion of CityCenter from opening by the end of 2009.

118. On the morning of March 5, 2008, MGM management made a presentation at the

Bear Stearns 14th Annual Retail, Restaurant & Consumer Conference in New York City. On

information and belief, Lanni, Murren, D’Arrigo and/or Baldwin attended the conference. They

reaffirmed that CityCenter remained on time for a November 2009 opening and stated that the

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$8.1 to $8.4 billion construction estimate for CityCenter would most likely hold steady given that

approximately 75% of the project had GMP contracts in place. These statements were knowingly

false and misleading for the reasons set forth in ¶¶1 17(a)-(g) above.

119. Defendants’ March 5, 2008 statements caused MGM’s stock price to rise nearly 5%,

to $62.52 per share by the end of the day, from $59.85 per share the previous day.

120. By May 2, 2008, however, Macquarie reported that Defendants’ disclosures regarding

CityCenter’s rising construction costs had taken a toll: “[o]ne of the fundamental factors that have

weighed on shares lately has been the considerable cost escalation that MGM has seen throughout

construction of its ambitious CityCenter development.”

121. Then, on May 6, 2008, MGM issued a press release announcing its financial results

for the first fiscal quarter of 2008. Commenting on the results, Lanni advised that “[o]ur business

should be evaluated in the context of the state of the economy” and took an optimistic tone, stating

as follows:

“The gaming industry and our company have seen considerable growth within thelast several years, and even with near-term weaker economic conditions our resortsare still attracting premium customers and generating tremendous cash flow. We arefocused on our fundamental strategies which have consistently produced positiveresults.”

122. The Company further disclosed that, while MGM and Dubai World had each paid

$200 million in construction costs for CityCenter during the quarter ($400 million, in total), they

were in the process of securing additional funding for CityCenter:

During the quarter, the Company repaid $180 million of its senior notes atmaturity, and the Company and Dubai World each funded $200 million ofconstruction costs for CityCenter. The Company and Dubai World are currently indiscussions with several financial institutions with regard to bank financing for theproject.

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123. In an attempt to assuage rising investor concerns that MGM could not finance

CityCenter or that the project would fail for lack of funding, Defendant D’Arrigo once again assured

investors that the Company had adequate access to capital:

“Our company continues to generate strong cash flow and has significantdebt capacity under our credit facilities . . . . This combination provides amplecapital flexibility to meet all of our strategic growth initiatives and maintain ourstrategic focus during a difficult time in the credit markets.”

124. Following the issuance of the press release, Defendants conducted an earnings

conference call with analysts and investors, during which they reiterated the Company’s financial

results and expounded on its prospects. Insider Defendant Lanni acknowledged the challenging

economic environment, but assured the market that MGM had anticipated and was well poised to

weather the conditions:

The first quarter was obviously challenging. It was clearly impacted by theeconomy. We did expect this, and certainly had already discussed our experience inJanuary and part of February during our last earnings call. We still reported solidresults and cash flows at all of our resorts. We have been continually adjusting to theenvironment and ensuring that we really maximize the volume of guests in each ofour resorts. And we continue to look for areas of revenue growth through marketingand other initiatives, as well as areas for managing expenses as evidenced by ourrecent reduction in management positions.

It’s relatively difficult for us to forecast trends into the next few quarters butso far in the second quarter we are seeing much of the same as it relates to customervolumes and our job is to manage within the context to maximize profitability inwhat will surely be a challenge alleging year.

125. Murren largely echoed Lanni’s positive remarks, stating, in pertinent part, as follows:

As Terry mentioned, there’s no doubt that we are in a tough economicenvironment. We continue to react to that. We are focused in on areas where we candrive revenues, and more efficiently improve our cost structure throughout the wholeorganization. On the revenue side, many of these efforts are already underway.We’ve implemented them several quarters ago, and they are starting to hit their strideright now.

* * *

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We as a company continue to be positioned we believe very strongly in this market.We’ve been here before in tough economic times. We have positioned ourselves tobe the market leader, to operate more efficiently and effective in a toughenvironment that we are in. We are making solid profits right now, and when thetime comes when the economy does pick up, which it will obviously, eventually,we’ll be in a position to again, as we are right now, outperform our peers in terms ofprofitability.

126. Baldwin also represented that construction on the CityCenter project was proceeding

according to plan, and reaffirmed that “[t]otal project costs are expected to be . . . between $8.1

billion and $8.4 billion, excluding pre-opening expense of about $200 million.” He also provided

an update on the pending GMP construction contracts which were supposed to cap construction

costs: “we have eight GMPs, and we’ve actually received seven of them . . . . So that particular

eighth GMP . . . we are not going to execute it probably until the third quarter. . . . Most all other

GMPs will be . . . executed in the second quarter.”

127. Further, D’Arrigo spoke positively about MGM’s efforts to finance CityCenter:

As relates to our balance sheet, in February, we repaid $180 million of seniornotes using our availability under our credit facility, and had minimal debt maturitiesover the next 12 months. At quarter end, we have approximately 1.9 billionavailable under our bank credit facility, with roughly 60% of our debt beingfigured and 40% of our outstanding debt being floating, as of the end of thequarter. We are currently in the marketplace talking to our lead group of banks withregards to securing financing for CityCenter. We recently held a bank meeting inDubai with our partners there, and these leading institutions, which was extremelywell attended. The feedback has been very positive from this initial group of banks,and we look forward to progressing this financing here in the second quarter. Theproject is progressing quite well as Bobby pointed out, and given the sponsorshipand the progress we are making on the construction front and on the residential salesprogram, this is coming together quite nicely right now for us and our partners,Dubai World.

Our balance sheet is quite strong, as of the end of March, with ample bankcapacity, which affords us the ability to continue to significantly invest in ourproperties and plant the seeds for growth, while at the same time providing us withthe ability to be more opportunistic in how we access capital in these more difficulttimes.

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128. During the question-and-answer session on the May 6, 2008 conference call,

D’Arrigo confirmed that funding CityCenter would cost the Company an astonishing $100 million a

month until MGM could put appropriate financing in place:

[Lawrence Klatzkin, Analyst, Jefferies & Co.:] Last question, Dan, reallyfor you, for you [and] Dubai, funding CityCenter until you have a bank loan, it’sabout 100 million a month each?

[Dan D’Arrigo:] That’s roughly about right. And I think for the full year,CityCenter, for the full 2008, CityCenter was looking at about 2.5 billion of totalconstruction cost for this year. But like I said, we are in the market talking to ourlead banks right now, and the initial response has been pretty positive.

129. Later during the conference call, Murren added that securing the necessary financing

was a foregone conclusion, noting that “[i]t won’t be a matter, in our view, of getting the deal done.

It will be a matter of pricing.” He also represented in the call that “[t]he demand is quite high, not

only because MGM is a good credit [risk] but, frankly, a lot of our banks are welcoming the

opportunity to develop a relationship with our partner Dubai World.”

130. Separately, Baldwin expounded on the Company’s joint venture prospects and

purported ability to outperform its competitors, stating, in pertinent part, as follows:

The key for us is, with the balance sheet that we have and the way we wantreinvest[sic] our business, how do we build on that growth? We are capital-intensive business, and we think we can out-think our competitors in that area.We have in the past, and our cash flows and our existing casino resorts, we believe,will continue to increase over a period of many years.

131. In response to this news, and as Defendants continued to conceal the true condition

facing MGM and its prospects, the price of MGM common stock increased 6.64% to 51.85 per share

on unusually heavy volume of more than 6.6 shares traded.

132. In addition to the reasons set forth in 1[1[88(a)-(g), 120(a)-(e) and 117(a)-(g) above,

Defendants’ statements on May 6, 2008 referenced above in 1[1[121-130 were knowingly false and

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misleading when made because they failed to disclose and/or misrepresented the following adverse

facts, among others:

(a) Defendants knew the construction estimate for CityCenter of $8.1 billion to

$8.4 billion still was falsely understated. According to CW3, the design drawings for CityCenter

still were not completed. Therefore, it was not possible to formulate an accurate or reasonable

estimate because the exact quantity and grade of materials was not known. Moreover, according to

CW 1, since CityCenter was a “fast-track” project, it was being designed (and re-designed) in almost

real-time as it was being constructed. Therefore, according to CW 1, there was “no time to sit down

and do really good math on the costs” beforehand;

(b) Defendants also knew the $8.1 to $8.4 billion estimate was understated

because MGM had arbitrarily reduced Perini’s estimate of the actual costs by 20%, according to

CW3. Further, Defendants knew the increased CityCenter construction estimate was understated by

hundreds of millions of additional dollars because MGM had unreasonably and arbitrarily lowered

agreed-to, higher, accurate estimates, according to CW6 and CW7;

(c) Defendants knew the construction costs would continue to increase because of

Defendant Baldwin’s “design-at-all-costs” mentality wherein he considered high design paramount

to the cost to build CityCenter, according to CW1;

(d) Defendants knew the GMP contracts on CityCenter were “not really

guaranteed” maximum price contracts that would control costs. Indeed, according to CW2, the GMP

contracts signed by MGM contained various “allowances” which allowed the costs to exceed the

GMP if MGM requested changes or rush orders. Therefore, no GMP really existed and such

contracts did not cap construction costs. Moreover, according to CW2, MGM was making so many

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change orders that it was continually increasing the cost of constructing CityCenter and therefore the

GMP contracts would not cap construction costs;

(e) CityCenter was plagued by construction problems, according to CW3, CW8

and CW9, which were increasing costs and causing delays. In fact, The Harmon had already

received a NCR in the winter of 2007, and major issues were apparent there as early as March 2008,

according to CW8;

(f) Defendants knew it was becoming very unlikely that MGM could arrange the

financing for CityCenter that it wanted or that it could fund CityCenter because: (i) MGM’s

business was deteriorating and generating less cash flow, thus making it less likely to qualify for the

desired financing, and putting the Company in peril of violating its lending covenants and defaulting

on its bank credit facility; (ii) the ever increasing construction costs for CityCenter made MGM a

bad credit risk; (iii) the credit markets were drying up and little credit was available; and (iv) Wall

Street lenders were scrutinizing their extensions of credit to MGM and other gaming industry

companies as gaming industry trends were declining; and

(g) Given the foregoing alleged in sub-paragraph (f) supra, Defendants knew

lenders were not eager or “positive” about lending funds to MGM or CityCenter. Indeed, according

to CW 10: (i) as of the first quarter of 2007 and 2008, CityCenter was the number one risk to the

Company; (ii) CityCenter was problematic because it was an eight- to 10-year project that was

condensed into a five -year timeline, and because of this, everything on the project had to happen

perfectly or else the schedule would get thrown off and costs would increase significantly.

133. Then, on May 14, 2008, MGM issued a press release announcing that the Board had

approved another share repurchase program pursuant to which the Company would purchase up to

an additional 20 million shares of its common stock. MGM also announced that it had “repurchased

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1.27 million shares in the current quarter to date, thereby leaving 1.36 million shares outstanding

under the previous share repurchase program approved in December 2007.” In response to this

announcement, which again assured the market that the Company’s finances were in order, the price

of MGM common stock increased 2% to $51.46 per share on that date, and further increased 3.32%

to $53.17 per share on the following day, on volume of more than 2.5 million shares traded each day.

134. By June 2008, Defendants knew, but failed to disclose, that serious problems were

unfolding with the construction of CityCenter. For example, Clark County inspectors had issued

numerous Notices of Violation to MGM between July 2008 and September 2008 – including one

Notice on August 5, 2008, that stated “[i]t has been found, in the field, that the link beams

reinforcing has severely deficient items, such as reinforcing torch cut, misaligned and missing cap

ties . . . on floors 5 through 20.” In addition, the Notice of Violation ordered work on The Harmon

Tower suspended. The other Notices of Violation included: (i) July 15, 2008 Correction Notice, No.

31283, identifying various structural deficiencies; (ii) July 18, 2008 Notice of Violation, N.O.V. No.

24844, ordering the contractor to “stop structural construction above the level already attained”

and noting that “construction may resume upon approval by Clark County Development Services”;

(iii) August 5, 2008 Notice of Violation, N.O.V. No. 24831, as described above; (iv) September 8,

2008 Notice of Violation, N.O.V. No. 24874, reporting on additional violations identified through

“field observations and destructive testing”; (v) an additional Notice of Violation on September 8,

2008, N.O.V. No. 24876, identifying similar deficiencies; and (vi) September 17, 2008 Notice of

Violation, N.O.V. No. 22322, providing that “[n]umerous deficiencies have been found in

reinforcing of link beams from floor 6 thru [sic] 20” and that “[n]o new construction shall continue

from the bottom of 23rd level deck and up.” Moreover, violations at CityCenter persisted even after

Clark County issued these notices, and, on February 9, 2009, an inspector issued a Correction Notice

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indicating that a contractor was “working without Clark County approved plans,” reportedly

referencing all building permits at the site.

135. According to CW1, CW2 and CW3, MGM was aware of these issues at least as

early as June 2008. And, according to CW8, a NCR had been issued to The Harmon in the winter

of 2007, while other issues were apparent as early as March 2008. In an effort to maintain the

Company’s artificially inflated stock price, however, Defendants failed to publicly disclose these

facts. According to CW9, “all sorts of problems began erupting with the CityCenter project.” CW9

said the major cause of cost increases and slips in the construction schedule was that “there were a

lot of flaws in the implementation” by Perini, and as a result many projects “had to be re-done.”

CW9 said “there were a lot of the[se]” errors. Furthermore, as alleged herein, MGM failed to

disclose the problems at The Harmon Tower at CityCenter until January 7, 2009 – at least six

months after the Company’s receipt of the Correction Notice on July 15, 2008, and approximately

one year after the NCR received in the winter of 2007.

136. With the market unaware of any of the foregoing problems, analysts continued firing

off positive reports based on Defendants’ false reassurances. For example, on July 3, 2008,

Deutsche Bank issued a highly positive research report on MGM based on meetings that it had

hosted in New York with Defendant Murren. In the report, entitled “Thoughts from mgmt meetings;

maintain Buy rating,” Deutsche Bank maintained a price target of $74.00 per share (the stock then

traded at half of that) and indicated that Murren’s reassurances made it “come away feeling more

encouraged about current volumes, pricing and visibility in Vegas, and City Center financing

which is an overhang for the MGM shares.”

137. Moreover, based on those meetings and Defendants’ previous comments, Deutsche

Bank expressed its belief that MGM would easily secure the necessary CityCenter financing:

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Pending Catalyst: Concern about City Center financing is overhang in the MGMshares as the market is generically concerned about sizeable demand for creditbeing met by a struggling financial sector. MGM is looking to raise more than $3Bto finalize City Center, which is an $8.8B project at the high end of the aggregateGMPs. The company has $1.9B in availability via its credit facility which iscurrently at an attractive LIBOR +0.625%. MGM appears to have a plethora of debt-related options for this balance, including some use of the facility. We suspectnumerous bank debt structures may be presenting MGM with more favorable rateoptions than equity investors anticipate and management expects to finalize thefinancing by the end of July. This seems due to the attractive credit for the JV(should have more equity than debt in City Center once complete), and our sensethat both Dubai World and MGM Mirage represent the ‘gifts that keep on giving’on the financing front for interested banks. It should be noted that MGM is notclose to covenant caps, currently leveraged at a favorable 5.5x, peaking at 6.5ximmediately before City Center opens (Q409)-better if cash flow inflects positively,then moderating along with cash flow generation at the property.

138. Notably, in the report’s “Valuation and risks” section, Deutsche Bank did not list as a

risk the possibility that MGM would be unable to secure financing.

139. In response to this report, the Company’s common stock price rose 7.55% to $30.76

per share, and 2.18% to $31.43 per share, on July 7 and 8, 2008, respectively.

140. Other analysts also believed Defendants’ reassurances. On July 14, 2008, Jefferies

issued a positive research report on MGM based in part on a July 11, 2008 meeting that it hosted

with MGM management. In the report, entitled “Reassurance From Mgt During Tough Market -

Thoughts From Our Meeting,” Jefferies maintained its “Buy” rating and reiterated its $102 per

share price target. According to Jefferies, “[management] was transparent on their [sic] outlook for

the short and long-term, and we believe MGM’s future remains bright.” In the report, Jefferies

disclosed that management “believes investors will be ‘pleasantly surprised’ at the performance of

many of its properties,” and further revealed the following regarding CityCenter:

City Center - Mgt. Expects Over a 10% ROI at Minimum: MGM signed its finalfixed price contract keeping the project at $9.2bb. However, mgt. believes it hashundreds of millions of potential cost savings it can realize. MGM is close to closingon a $3bb non-recourse City Center loan at LIBOR +/- 4% with the largestoutstanding issue with the banks being the distribution of the condo sale proceeds(MGM wants both its and Dubai’s recent loans to be repaid before the banks).

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Condo sales remain strong despite two recent price increases as new sales are beinggenerated at the recently opened Dubai sales office.

141. On August 5, 2008, MGM issued a press release announcing its financial results for

the second fiscal quarter of 2008, in which it disclosed that “[t]he Company earned $0.40 per diluted

share from continuing operations in the 2008 second quarter, compared to $0.62 in the prior year

second quarter.' The press release also disclosed that MGM had incurred another $300 million in

construction costs associated with the CityCenter project, and that it was still in the process of

obtaining financing to fund the remaining construction costs:

During the quarter, the Company and Dubai World each funded $300 millionof construction costs for CityCenter. The Company and Dubai World are currentlyworking with several relationship lenders regarding a $3 billion financing packagefor the joint venture. To date, CityCenter has received commitments totaling $1.65billion from the lead banks – Bank of America, Royal Bank of Scotland, UBS, BNPParibas, and Sumitomo Mitsui. In addition, CityCenter has received commitmentsfrom Deutsche Bank, Morgan Stanley, and the Bank of Nova Scotia.

142. Commenting on the results and acknowledging the deteriorating credit market

conditions, Defendant Lanni claimed that the Company’s second quarter results reinforced MGM’s

“ ‘solid’' “ ‘track record of successfully navigating through changing economic conditions.’'

Defendant D’ Arrigo further commented on the market conditions, bragging that MGM had secured

“‘well over half’' of the funding necessary to finance CityCenter “‘[i]n an unprecedented credit

market,’' and that the Company “‘anticipates finalizing its bank financing this quarter.’'

143. Defendants conducted an earnings conference call following the issuance of the press

release, during which they reiterated the Company’s financial results and expounded on its

prospects. Defendants maintained the false and misleading positions they had staked out in previous

calls and public disclosures: (i) that MGM was faring well despite the downturn in the economy, and

business was trending positively; and (ii) the CityCenter project was proceeding according to

schedule.

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144. Defendant Lanni once again represented that the Company could weather the

challenging economic climate, stating that “[w]e are very pleased actually with our second quarter

results, and though the economy certainly remains challenging, we believe we’re very successful at

generating revenues very near prior -year levels.” Murren further stated that “we see improvement

in the fourth quarter and in most revenue items and certainly in a profit picture as well.”

145. Defendant Baldwin – who was keenly aware of the construction problems then

plaguing CityCenter based on the weekly meetings he conducted – once again falsely represented

that CityCenter was on schedule:

I said on the last call that everything is on schedule. If you’ve been by CityCenterlately, you can see that most of the buildings are approaching full height. In fact, allof the buildings will be full height by the end of February of next year.

146. Baldwin also reinforced that construction costs were under control by again

highlighting the GMP contracts MGM was pursuing for CityCenter. Baldwin stated, “ as we track

the maximum price contracts for CityCenter, we have all eight of the GMPs in. Six have been

signed and executed by the joint venture board with Dubai World. The other two will be executed,

the last two will be executed and signed on the 20 th of August and that will complete all of the – all

of the GMPs for CityCenter.”

147. Also during the call, Defendant D’Arrigo stated that CityCenter’s “gross cash

construction and preopening costs” estimate was $9.1 billion, while the Company’s prior estimate

was $8.1 to $8.4 billion, excluding preopening and land expenses. When questioned whether the

prior estimate had been increased, D’Arrigo stated:

Two things, one is the $9.1 billion does include preopening, which is about $200million, and also that number is the full GNP [sic, should be GMP] number whichstill contains some contingencies and some potential cost savings. . . . And thenumber we gave you last quarter [$8.1-$8.4 billion] is unchanged in terms ofguidance . . . .

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148. And, yet again, D’Arrigo claimed that the Company had adequate access to capital

under its credit facility and could otherwise secure financing for its share of the CityCenter project:

Regarding our long-term debt, we borrowed net debt of just over $200 million in thequarter. At quarter end, we had approximately $1.7 billion available under ourbank credit facility. And here in early August, we had some senior notes thatmatured, so after giving effect to roughly that $200 million of senior notes, our creditfacility availability is approximately $1.5 billion in early August. In the quarter, werepurchased 2.6 million shares at a cost of $134 million. That completed our 2007authorization and in May of 2008, our Board had authorized another 20 million sharerepurchase program which we have not utilized to date.

On the CityCenter update, on the CityCenter financing, we have—once the financingis in place, we’ll have spent approximately $4.2 billion of the estimated $9.1 billionof gross cash construction and preopening costs and, therefore, that will leave justunder $5 billion left to spend to complete the construction of the project.

As we said in the release, the joint venture is seeking a $3 billion financing package,which we’re working on with our lending group right now. We believe that bankportion will be completed this quarter and as highlighted, in this very difficultcredit environment, but we have already received firm commitments of over $1.65billion of this package. We continue to work with several domestic and internationalrelationship banks to complete this financing.

Based on these expectations, the partners will be committed to funding thedifference, which will be just under $2 billion after financing is in place, splitevenly between MGM and Dubai World. We anticipate that the timing of theseremaining funds would be approximately half throughout the remainder of ‘08 andinto early ‘09 and the remainder towards the end of construction as needed. I’dhighlight that these numbers are before the application of any condo proceeds or anyfuture debt financing that may be done at the joint venture level.

From an MGM Mirage perspective, we have ample capacity to fund our share ofthese costs through our available credit lines and available free cash flow from ouroperations and as most of you know, our credit facility can actually be expandedfrom $7 billion to $8 billion with additional commitments from lenders as well. Sowe’re well in good shape there to fund these costs.

149. Additionally, D’ Arrigo expounded on his comments and represented that condo sales

associated with the CityCenter project could offset funding costs associated with its construction,

and that the impending 2011 maturity of MGM’s credit facility could be handled with bond

issuances:

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[Lawrence Klatzkin, Analyst, Jefferies & Co., Inc.:] You’re saying youneed $2 billion for the – for CityCenter, you have $1.7 billion of condo sales. Isthere a chance some of those condo sales will be applied toward some of the finalneeds and you actually won’t need to put in your share of the on poll – on balance $1billion, that you’ll be able to take out some of the money from the condo sales?

[Dan D’Arrigo:] That’s correct. As I pointed out, some of the requirement isdue at the end of – and near completion of construction and we start actually – we’reabout – I think about a year away from Vdara being completed, so we will startreceiving condo proceeds in August of ‘09. So that is before the application of anycondo proceeds, which we’re expecting, obviously, based on our track record thusfar.

[Lawrence Klatzkin:] And will the banks let you apply the condo proceedsto – toward the $2 billion needed?

[Dan D’Arrigo:] Yes.

[Lawrence Klatzkin:] Okay. So if you end up selling $2 billion of condos,the odds are you won’t have to come up with the bulk of that money?

[Dan D’Arrigo:] That’s correct.

[Lawrence Klatzkin:] Okay. You have a big bank maturity next year.Anything going on with the banks on that?

[Dan D’Arrigo:] We had – our bank credit facility doesn’t mature until2011. I think you might be referring to – we have a couple of bond issuances thatcome due in July – kind of around July and October of next year that I think –

[Lawrence Klatzkin:] Right. I saw that, the bond.

[Dan D’Arrigo:] – that total about $1.3 billion in total next year, so we’ll be– after CityCenter, we’ll be working on extending those maturities and beingproactive on that front.

150. Murren validated D’Arrigo’s statements and reiterated that MGM would have the

financing in place for CityCenter that quarter, downplaying the immense public concern that the

Company would be able to secure financing:

[Lawrence Klatzkin:] So basically if I have this right, if your condo salesare over $2 billion, and you really – you really don’t need to raise any additionalmoney for CityCenter and you’ll end up with more than $1 billion of increased freecash over the next 18 months?

[Jim Murren:] I think you’re on the right track, Larry. I mean it –

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[Lawrence Klatzkin:] All right. Thanks, guys.

[Jim Murren:] It’s been a remarkable commentary around CityCenterfinancing. We’ve done dozens of bank financings over the past decade and there’san incredible amount of interest in this particular one, and it’s taken a little bitlonger than we would have liked because we’ve been having healthy discussions onrate and also on structure. But we’re over halfway there, we’re going to get it donethis quarter, we wanted it done last quarter, but we’re going to get it done thisquarter and in the meantime we’re funding CityCenter with our partners and we havea tremendous amount of optionality with this in terms of other joint venturefinancings and other bank financings. We think it’s been completely overdone interms of the interest on this, but nonetheless, it’s[] topical.

151. Murren also later confirmed that the $1.65 billion in funding was the product of a

firm commitment by “the top five banks and we have more committed than that, nicely more than

that,” claiming “that’s why we believe we’re going to close this deal in this quarter because we’re in

the home stretch.”

152. In turn, Lanni represented that the turbulence in the credit markets was an

advantage, claiming that “it allows us to get much more detailed into the drawings and when we do

eventually begin construction on these properties, we’ll be in much better understanding of what the

actual cost will be and a chance of having overruns and what have you, obviously, would be

mitigated.” Murren also cast the condition of the credit markets in a positive light, representing that

it would prevent competitors from developing properties in Las Vegas, to MGM’s benefit:

[W]e’ve pushed off joint ventures, we’ve canceled some, many projects that hadbeen announced will just never be built and the reality is if you’re not here right now,if you’re not fully financed or have the balance sheets to do projects, you’re just notgoing to do anything over the next several years. And that, we think, is a profoundpositive for our competitors that are here today and ourselves.

153. In response to this news, the price of MGM common stock increased 15.65% to

$35.85 per share on that date, on volume of more than 8.8 million shares traded. On August 11,

2008, the Company filed its Form 10-Q for the second quarter of 2008, which largely repeated the

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results announced on August 5, 2008. In response, MGM’s stock price further increased 9.21%, to

$36.52 per share, on volume of nearly 7.1 million shares traded.

154. Despite knowing that MGM’s statements in its second quarter 2008 Form 10-Q

regarding CityCenter’s construction costs were grossly understated, among other things, Defendants

Lanni and D’Arrigo falsely certified, pursuant to §302 of SOX, inter alia, that the Company’s

second quarter 2008 Form 10-Q was free of material misstatements; and that internal controls over

financial reporting provided reasonable assurances over the reliability of financial reporting.

Specifically, Lanni and D’Arrigo certified that they had personally reviewed MGM’s financial

statements, designed and evaluated MGM’s disclosure controls and evaluated MGM’s internal

controls over financial reporting. Moreover, Defendants Lanni and D’Arrigo certified that the

financial statements “[do] not contain any untrue statement of material fact or omit to state a material

fact necessary to make the statements made, in light of the circumstances under which such

statements were made, not misleading” and “fairly present in all material respects the financial

condition, results of operations and cash flows of [MGM].”

155. In addition to the reasons set forth in ¶¶88(a)-(g), 102(a)-(e), 117(a)-(g) and 132(a)-

(g) above, Defendants’ statements on July 3 and 14, 2008 and on August 5, 2008 referenced above in

¶¶136-137, 140-152 and 154 were knowingly false and misleading when made because they failed to

disclose and/or misrepresented the following adverse facts, among others:

(a) Defendants knew the construction estimate for CityCenter of $8.1-$8.4 billion

still was falsely understated. According to CW3, because the design drawings for CityCenter still

were not completed, it was not possible to formulate an accurate or reasonable estimate because the

exact quantity and grade of materials was not known. Moreover, according to CW 1, since

CityCenter was a “fast-track” project, it was being designed (and re-designed) in almost real-time as

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it was being constructed. Therefore, a reasonable estimate could not be formulated because,

according to CW 1, there was “no time to sit down and do really good math on the costs” beforehand;

(b) Defendants also knew the CityCenter construction estimate of $8.1-$8.4

billion was understated because MGM had arbitrarily reduced Perini’s estimate of the actual costs by

20%, according to CW3. And, Defendants knew the estimate was further understated by hundreds

of millions of additional dollars because MGM had unreasonably and arbitrarily lowered agreed-on,

higher, accurate estimates, according to CW6 and CW7;

(c) Defendants knew CityCenter’s construction costs were going to continue to

increase because Defendant Baldwin was from the “design-at-all-costs” school of thought which led

to late design submissions, revisions and significant cost increases;

(d) Defendants knew the GMP contracts on CityCenter were “not really

guaranteed” maximum price contracts that would control costs. According to CW2, because the

contracts contained various “allowances” that allowed Perini to charge in excess of the GMP for

changes or rush orders requested by MGM, there really was no GMP. Moreover, according to CW2,

MGM was making so many change orders that it was continually increasing the cost of constructing

CityCenter and therefore the GMP contracts would not cap construction costs;

(e) Defendants knew it was unlikely MGM could arrange $3 billion in financing

for CityCenter during the quarter because: (i) MGM did not have abundant opportunities available to

secure the rest of the financing needed to fund CityCenter as it was very difficult to finance projects

in Las Vegas at that time; (ii) MGM’s business was deteriorating and generating less cash flow thus

making it less likely to qualify for additional financing, and putting the Company in peril of violating

its lending covenants and defaulting on its bank credit facility; (iii) the ever-increasing (but

undisclosed) construction costs for CityCenter were consuming cash and borrowings and made

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MGM a bad credit risk; (iv) the credit markets were drying up and little credit was available; and (v)

given the foregoing, lenders were not eager to lend to MGM or CityCenter;

(f) Defendants knew CityCenter’s development was hampered by widespread

construction defects, whose scope and significance Defendants concealed from the market even as

they increased in magnitude. According to CW8, problems began with The Harmon as early as the

winter of 2007, when it received a NCR. Further, according to CW8, by March 2008, other issues

were apparent at The Harmon. Moreover, according to CW3, MGM’s engineering consulting firm

Converse Consultants issued a report to MGM on or about June 25, 2008, which identified major

problems with the rebar installation at The Harmon. The rebar had not been properly installed,

threatening the building’s structural integrity. Moreover, according to CW9 and CW3, there were

numerous other major construction problems at CityCenter, such as one of the floors of the

Mandarin Oriental Hotel was “floating” (which required removal of the floor, reinforcement

supports to be added and re-installment of the floor) and the concrete pour at the Veer Towers was

“screwed up.” The improperly installed rebar and inability to construct The Harmon to its desired

height were heavily discussed at weekly construction update meetings held by Defendant Baldwin

during the summer of 2008. In fact, as later media reports revealed, MGM had received multiple

Notices of Violation from Clark County, Nevada that prohibited ongoing construction work at The

Harmon and other CityCenter sites, both before and after Defendants made these optimistic

statements – including one such notice on August 5, 2008, the same day that Defendants made

positive statements about MGM’s ability to fully complete CityCenter’s construction. Moreover,

these construction defects, which Defendants concealed from the market, required the Company to

abandon its plans to open The Harmon, which meant that it could not pay down its credit facility

with the proceeds from the condominium sales as Defendants had represented they would do; and

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(g) The SOX certification in ¶154 was false and misleading because Insider

Defendants Lanni and D’ Arrigo knowingly disregarded that (i) the second quarter 2008 Form 10-Q

contained numerous false and misleading statements relating to, or arising from, the Company’s

understatement of construction costs for CityCenter; and (ii) that internal controls over financial

reporting were inadequate.

156. On October 6, 2008, MGM issued a press release announcing that CityCenter had

“successfully completed the first phase of its $3.0 billion financing package by securing a $1.8

billion senior bank credit facility.” According to the press release, the facility would mature in April

2013 and would “be increased to a total amount of $3.0 billion as additional commitments are

received.” Defendant D’Arrigo spoke positively about this development, as well as MGM’s

financial condition:

Even in the current difficult lending environment, strong well-conceived projectsattract financing – CityCenter is such a project. We appreciate the strong supportCityCenter has received from these participating financial institutions . . . We andour partner are actively in discussions with additional financial institutions to obtainthe additional funding of the credit facility and are receiving strong interest in thesyndication process set to launch this week.

* * *

MGM’s strong balance sheet and long track record of superior financialperformance combined with the substantial financial resources of our partneruniquely position CityCenter in an obviously difficult credit market.

157. As CityCenter’s costs continued to rise and Defendants rummaged for financing, the

real estate and credit markets had collapsed, with Lehman filing for bankruptcy just weeks earlier,

IndyMac’s seizure, and the injection of hundreds of billions by the Federal Reserve to avoid further

failures.

158. The same day, MGM issued a separate press release announcing an amendment to its

senior bank credit facility, which “increases the maximum total leverage ratio, modifies drawn and

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undrawn pricing levels as well as revises certain definitions and limitations on secured

indebtedness.” Commenting on the amendment, D’Arrigo reiterated his previous false and

misleading remarks regarding the Company’s financial condition:

We are pleased by the overwhelming support our financial partners have shown inour Company . . . MGM enjoys one of the strongest balance sheets in our industryand although we have remained comfortably within all of our financialrequirements, we believe it is a prudent course of action to maintain greater financialflexibility in these uncertain credit markets.

159. Analysts bought into the rosy financial picture MGM painted. Indeed, on October 15,

2008, Jefferies issued a report concluding that “MGM is on solid footing” even amidst the then-

existing and deepening credit crisis. Similarly, on October 23, 2008, Sterne Agee issued a report

stating that even in the credit crisis, “MGM IS POSITIONED TO WEATHER THE STORM.”

160. On October 29, 2008, MGM issued a press release announcing its financial results for

the third fiscal quarter of 2008. Lanni represented that “[o]ur performance was impacted by the

global economic environment, a trend that is not unique to our industry, but we continue to generate

strong cash flows.” Defendant Murren made similar remarks, noting that “[w]hile our margins have

held up well in a difficult environment, we continue to make permanent improvements to our cost

structure which will benefit us now and into the future . . . .” Contrary to these remarks, CW5 and

CW9 recalled that the Company was struggling from a cash flow standpoint at this time and things

were getting very bad for MGM.

161. Defendant D’Arrigo spoke positively in the press release about the Company’s

financial condition and prospects, claiming that “[s]ecuring $1.8 billion of financing at CityCenter

and amending our $7.0 billion senior credit facility provide the Company with significant additional

financial flexibility,” and representing that “[w]e intend to further access the capital markets, and

aggressively manage our liquidity and financial position.” Defendants also disclosed that it was

“reasonably possible” MGM would record a non-cash impairment charge to goodwill and indefinite-

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lived intangible assets during the fourth quarter of 2008 as a result of the substantial decline in the

Company’s market capitalization.

162. While maintaining that CityCenter was still on schedule and that financing would be

obtained, Defendants also were forced to disclose that MGM had shelved its development of the

MGM Grand Atlantic City, after having made “extensive progress on design and other pre-

development activities[,]” because “[c]urrent economic conditions and the impact of the credit

market environment have caused the Company to reassess timing for the project.” Lanni also

indicated that MGM’s joint venture with Kerzner would postpone its development of a major resort

complex on the Las Vegas Strip, stating, in pertinent part, as follows:

We continue to believe that Atlantic City represents an important market for furtherdevelopment . . . . We intend to resume development at such time as economicconditions and capital markets are sufficiently improved to enable us to go forwardon a reasonable basis. Likewise, with respect to our joint venture with KerznerInternational and Istithmar announced in September 2007 for the development of amajor resort complex on the southwest corner of the Las Vegas Strip and SaharaAvenue in Las Vegas, we have agreed with our joint venture partners that weshould defer additional design and pre-construction activities and have amendedour joint venture agreement accordingly. These actions reflect the Company’scommitment to maximize our financial resources in this environment.

163. Following the issuance of the press release, Defendants conducted an earnings

conference call during which they reiterated the Company’s financial results and expounded on its

prospects. Baldwin represented that “[a]ll the buildings at CityCenter are on schedule to be opened

late next year in 2009” and that construction underwent “great strides during the third quarter.”

Specifically, he noted that construction at The Harmon was on track, stating that “ structural

concrete decks ha[d] been placed through level 22[, e]xterior curtain wall installations were up to

14[, and p]odium structural steel has been erected, and has been completed, and metal deck and

concrete installations are ongoing.”

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164. During the conference call, Defendant Baldwin also indicated that “[a]ll eight of the

GMPs, which represents the total work at CityCenter, have been signed and executed by the

parties . . . and establish a guaranteed maximum price for the general contractor [Perini]. . . . In an

effort to lower the cost of the project, we have analyzed areas of possible savings and developed a

plan to achieve those savings. The planned target savings [are] approximately $400 million . . . .”

165. D’Arrigo represented that MGM also had taken steps to shore up its liquidity

positions, stating, in pertinent part, as follows:

By amending our credit facility, securing a portion of our CityCenter financing, andmanaging our property capital, we believe our actions have solidified our near-termliquidity and we intend to further access the capital markets to manage our long-term financial position.

166. During the question-and-answer session, Murren again reassured analysts and

investors that Defendants were confident about their ability to access the capital markets and

withstand the challenging economic environment:

[Celeste Brown, Analyst, Morgan Stanley:] In terms of the announcementyou guys made this morning, if you can raise the capital – or I guess the red, it’s notquite an announcement – if you can raise the capital that you’re attempting to raise,do you feel that you’re safe through the end of 2009, even in a worst-case, the wayyou look at things today?

[Jim Murren:] As you know, Dan said it. We can’t comment under SECrules about anything that I think you’re referring to. But we have access, and alwayshave, to capital markets of every type. And we are very confident that we have theability to manage this business and manage our balance sheet through the economicstorm that we’re in.

167. In fact, after commenting that “we are more comfortable that we can add to th[e

credit] facility than we were even a month, month and a half ago,” Murren added that the Company

had so many financing options available to it that it simply could not fail, stating, in pertinent part, as

follows:

In addition, I think people have lost sight of the fact that this Company at the parentlevel has many options to raise capital, which gets to the third issue that you

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mentioned, the liquidity issue. This company will not allow itself to be in any typeof financial jeopardy because we have too many options available to us in too manyareas and we have too strong of a series of relationships with financial partners,whether they be banks, bond equity partners, and JV partners. And we feel like wehave the tools available to us to improve our liquidity in this very difficult time.

168. In response to these developments, MGM’s stock price increased 33.11% to $13.75

per share on October 29, 2008, on extraordinarily high volume of nearly 21.2 million shares traded;

increased 11.78% to $15.37 per share on October 30, 2008, on nearly 9 million shares traded; and

increased 7.09% to $16.46 per share on October 31, 2008 on more than 8.7 shares traded.

169. In addition to the reasons set forth in ¶¶88(a)-(g), 102(a)-(e), 117(a)-(g), 132(a)-(g)

and 155(a)-(g) above, Defendants’ statements in October 2008 referenced above in ¶¶156, 158 and

160-167 were knowingly false and misleading when made because they failed to disclose and/or

misrepresented the following adverse facts, among others:

(a) Defendants knew CityCenter’s development was hampered by widespread

construction defects, particularly those affecting The Harmon, whose scope and significance

Defendants concealed from the market even as they increased in magnitude. According to CW8,

The Harmon had construction problems as early as the winter of 2007, which continued to March

2008. In addition, according to CW3, MGM’s engineering consulting firm Converse Consultants

issued a report to MGM on or about June 25, 2008, which identified major problems with the rebar

installation at The Harmon. Moreover, according to CW3 and CW9, there were numerous other

major construction problems at CityCenter, such as one of the floors of the Mandarin Oriental Hotel

was “floating” (which required removal of the floor, reinforcement supports to be added and re-

installment of the floor) and the concrete pour at the Veer Towers was “screwed up.” The

improperly installed rebar and inability to construct The Harmon to its desired height were heavily

discussed at weekly construction update meetings held by Defendant Baldwin during the summer of

2008. In fact, as later media reports revealed, MGM had received multiple Notices of Violation

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from Clark County which prohibited ongoing construction work at The Harmon and other

CityCenter sites, starting in July 2008. Moreover, these construction defects, which Defendants

concealed from the market, required the Company to abandon its plans to open The Harmon, which

meant that it could not pay down its credit facility with the proceeds from the condominium sales as

Defendants had represented they would do;

(b) Defendants knew they could not cut $400 million from the CityCenter

construction budget because the publicly-announced $8.1-$8.4 billion construction estimate for

CityCenter already was falsely and arbitrarily understated by 20% by MGM, according to CW3.

Thus, construction cost savings could not and would not be realized. Moreover, according to CW 1,

because CityCenter was being designed (and re-designed) in almost real-time as it was being

constructed there was “no time to sit down and do really good math on the costs” beforehand;

therefore any estimates of construction costs or savings could not be reasonably calculated;

(c) Defendants also knew they could not cut $400 million from the construction

budget for CityCenter because the previous estimates had already been arbitrarily and unreasonably

understated by hundreds of millions of additional dollars pursuant to directives by MGM, according

to CW6 and CW7;

(d) Defendants knew MGM was making so many revisions to the designs and

construction of CityCenter that the costs continued to increase, not decrease, according to CW2;

therefore no savings could be achieved;

(e) Defendants knew CityCenter’s construction costs were going to continue to

increase because Defendant Baldwin had a “design-at-all-costs” mentality wherein he considered

high design paramount to the cost to build CityCenter, according to CW1;

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(f) Defendants knew the GMP contracts on CityCenter were “not really

guaranteed” maximum price contracts that would cap the cost to construct CityCenter, according to

CW2. Rather, the contracts contained various “allowances” for any changes by MGM which would

allow Perini to exceed the GMP of the contracts. According to CW2, MGM was making so many

change orders that it was continually increasing the cost of constructing CityCenter, and not saving

on construction costs. Therefore the GMP contracts would not cap construction costs;

(g) Defendants knew Defendant Lanni’s statement that “we continue to generate

strong cash flows” and Defendant D’Arrigo’s statement that Defendants had “solidified [MGM’s]

near-term liquidity” were false because MGM was struggling from a cash position in October 2008,

according to CW5 and CW9; and

(h) Defendants knew MGM did not have significant financial flexibility, could

not access capital markets of every type, did not have many options to raise capital, and could not

truthfully say it would not allow itself to fall into any type of financial jeopardy because: (i) MGM

had very limited opportunities available to it to secure the rest of the financing needed to fund

CityCenter as it was very difficult to finance projects in Las Vegas at that time; (ii) MGM’s business

was deteriorating and generating less cash flow thus making it less likely to qualify for additional

financing, and putting the Company in peril of violating its lending covenants and defaulting on its

bank credit facility; (iii) the ever increasing (but undisclosed) construction costs for CityCenter were

consuming cash and borrowings and made MGM a bad credit risk; (iv) the credit markets were

drying up, little credit was available, and even then only at prohibitive rates; and (v) given the

foregoing, lenders were not lending to MGM or CityCenter.

170. On December 15, 2008, MGM issued a press release announcing that it had agreed to

sell Treasure Island Hotel & Casino for $775 million, consisting of $500 million in cash and $275

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million in secured notes bearing 10% interest. Commenting on the sale, Murren stated, in pertinent

part, that “[t]his transaction creates value to our stakeholders through significantly increased

liquidity and enhanced financial flexibility.” In response, several analysts opined that the proceeds

from the sale would ease MGM’s liquidity issues. The transaction eventually closed on March 20,

2009 and, presumably because of MGM’s dire financial condition, the Company received $600

million in cash and a $175 million secured note bearing 10% interest.

171. On January 7, 2009, MGM issued a press release suddenly announcing drastic

changes to the scope of CityCenter. These changes, which were related to The Harmon Hotel &

Spa, “include[d] postponing the opening of the hotel to late 2010 and cancelling The Harmon

residential condominium component.” As the press release indicated, The Harmon would have had

200 residential units, of which 88 were under contract to be sold; in connection with the cancellation,

purchasers would receive refunds or the choice of purchasing units at other MGM properties.

Commenting on the scope changes, Baldwin blamed “contractor construction errors” but noted that

cancelling The Harmon would “avoid the need for substantial redesign.” MGM also announced that

these scope changes would translate to hundreds of millions of dollars in cost savings, as follows:

With the cancellation of The Harmon residential component as well as otheradditional cost savings the company now anticipates total cost savings ofapproximately $600 million up from its previously stated $400 million. In addition,by postponing The Harmon Hotel by one year CityCenter will defer approximately$200 million in construction costs to complete the interior fit out of The Harmon.

172. In a letter dated October 27, 2008, Frank Martinovic, a professional engineer

employed by the project’s engineering firm Halcrow Yolles, advised an MGM architect, Bill Bradley

of AAI Architects, that “[t]he current status of link beam repair is such that it does not appear the

contractor can execute the repair as detailed in a timely manner. Given this fact I see no recourse

but to abandon the repair as currently being executed once level 15 is done.” Nevertheless, MGM

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did not announce the changes to the scope of The Harmon until January 7, 2009 – nearly six months

after the Company’s receipt of the first Correction Notice on July 15, 2008.

173. According to statements made by Baldwin in November 2010, MGM currently plans

to demolish the entire Harmon Structure: “Right now, I have a building I can’t do anything with [it

is] the poster child for non-conforming work worldwide.”

174. CityCenter’s development issues persisted even after the announcement of the scope

changes. For example, a Las Vegas Review-Journal investigation revealed that The Harmon had a

69% unresolved discrepancies rate as of February 13, 2009, while other CityCenter buildings had

similarly high rates of unresolved problems. In addition, MGM reportedly received a NCR on

February 9, 2009, which provided that a contractor was working without plans approved by Clark

County. Other similar violations also were exposed as a result of the Las Vegas Review-Journal

investigation.

175. In a January 9, 2009 Form 8-K, MGM disclosed that the Company would “recognize

a non-cash impairment charge of approximately $1.2 billion related to goodwill and certain

indefinite-lived intangible assets in the fourth quarter of 2008.” MGM further disclosed that “[t]he

impairment charge resulted from factors impacted by current market conditions, including, inter alia,

“higher discount rates resulting from turmoil in the credit and equity markets” and “current cash

flow forecasts for the affected resorts.” The Company’s stock price declined 6.36% in response to

this news. 6

6 On January 15, 2009, the Las Vegas Sun published another article concerning the CityCenterconstruction, adding that the engineer of record on the project had discovered in July 2008 thatcontractors had wrongly installed structural rebar on floors 6 through 15 of The Harmon.

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176. After digesting this adverse news, on February 3, 2009, Moody’s downgraded

MGM’s credit rating to B 1 from Ba3, indicating that the Company’s ratings remained on review for

further downgrades. Moody’s noted that the downgrade “reflect[s] the probability that earnings in

2009 will fall more than previously expected” and indicated that the Company “‘has been unable to

raise the targeted $3.0 billion in capital for its CityCenter development, and so its cash needs have

increased.’” Moody’s further disclosed that MGM’s debt/EBITDA level was “ ‘inconsistent with its

prior rating’” and observed that “MGM’s liquidity remains weak.”

177. Moody’s also expressed its belief “that availability under the company’s $4.5 billion

revolving credit facility could drop below $300 million by year-end and would be insufficient to

cover maturing bond debt of $1.1 billion in 2010.” Moody’s downgrade also warned that MGM’s

“ratings remain[ed] on review for further possible downgrade[,]” indicating that “[t]he review will

focus on MGM’s plans to shore-up its liquidity position and its ability to maintain a credit profile

and financial flexibility appropriate for a B 1 rating . . . .”

178. Also on that date, Oppenheimer issued an analyst research report concerning MGM,

in which it identified as a primary issue “funding for CityCenter’s completion” and noted that “ we

remain focused on liquidity, CityCenter funding and looming maturities.”

179. In response to this news, the price of MGM’s stock declined 14.51% to $6.95 per

share on extremely heavy volume of more than 7.7 million shares traded.

180. Then, in a February 27, 2009 press release on Form 8-K, MGM disclosed that on

February 24, 2009 it had “submitted a request to borrow $842 million under its $4.5 billion senior

revolving credit facility, which amount represented, after giving effect to $93 million in outstanding

letters of credit, the total amount of unused borrowing capacity available under its $7.0 billion

senior credit facility,” which was granted by its lender on February 26, 2009. In the February 27,

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2009 Form 8-K filing, the Company indicated that MGM’ s borrowing request “ was made in light of

the continuing instability in the capital markets and uncertain state of the global economy.”

181. Despite MGM’s credit facility stress, MGM continued to mislead investors about its

ability to timely complete and finance CityCenter. In fact, according to CW3, by February 2009,

MGM had been secretly planning to shut down the entire CityCenter project because of lack of

funds to pay for it. According to CW3, MGM was planning to file for bankruptcy protection at

noon on February 27, 2009 had its request to borrow the last $842 million on its credit facility been

denied. CW5 also recalled seeing MGM personnel around this time “lay[ing] out camping gear”

and staying at the office until one or two in the morning preparing the Company for bankruptcy.

182. On March 3, 2009, MGM filed a Form 12b-25 with the SEC, 7 indicating that it had

delayed filing its Annual Report on Form 10-K due to severe liquidity problems and an evaluation of

its financial condition and liquidity needs, all of which contributed to the inability to finalize its

financial statements. The Company disclosed that it could default under its senior credit facility as a

result of its potential noncompliance with the financial covenants thereunder, and that it would seek

a waiver or amendment of such provisions. As the Company noted, however, “[i]f the Registrant is

unable to negotiate such a waiver or amendment, a majority of the lenders under the senior credit

facility could accelerate repayment of borrowings under the senior credit facility and, under certain

circumstances, cross defaults could be triggered under the Registrant’s other debt instruments.”

MGM further disclosed that its financial statements for the year ended 2008 could contain a “going

concern” qualification as a result of doubt concerning its ability to continue as a viable entity.

7 A Form 12-b-25 is filed when a company is unable to comply with filing deadlines forquarterly and annual reports. A proper Form 12b-25 extends the company’s deadline for filing suchforms.

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183. The market recognized the significance of MGM’s March 3, 2009 SEC filing. In a

March 3, 2009 article entitled “MGM Mirage’s cash crunch; With credit line tapped out, bonds and

loans coming due, Chapter 11 seen as risk,” the Las Vegas Sun reported that analysts believed that

the Company was at risk for filing for bankruptcy protection (not knowing MGM had already

prepared to do so in February 2009), while the ratings agencies believed that the Company was

“likely to default on its bank loan this year because [its] debts are too high, relative to earnings.”

The article also reported that MGM “may have few options if it is unable to secure $1.2 billion in

financing needed to complete the [CityCenter] project and 50 percent owner Dubai World . . . is

unwilling or unable to put in more equity.”

184. In a March 4, 2009 article entitled “SEC FILING: MGM Mirage in talks with

lenders; Company says it will be in default if it can’t alter payment structure,” the Las Vegas

Review-Journal reported that MGM “could be facing a bankruptcy filing if it can’t renegotiate better

repayment terms with its lenders covering some $7 billion in loans.” The article also reported that a

default under the senior secured credit facility “could filter down and put all of MGM Mirage’s debt,

which totals roughly $13.5 billion, into default.” The article further reported that “Wall Street has

begun speculating that MGM Mirage might have to file for Chapter 11 bankruptcy protection to

force a restructuring of its bank loans and corporate debt.” The Company’s stock price declined

15.65% in response to this news.

185. Finally, on March 5, 2009, the broader market concluded that “MGM might have to

file for Chapter 11 bankruptcy.” Janney reported it was, in part, “cost overruns at . . . City Center”

that had MGM “suffering from a significant debt burden that it may not overcome.” Further, a

Macquarie note entitled “The lion weeps tonight; downgrade to Underperform,” stressed the MGM’s

woes were Company-specific: “we stress that not every company is built alike . . . regional gaming

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operators such as Penn and Ameristar are doing quite well [and] while Wynn faces many of the same

challenges as MGM does and is not well diversified, its balance sheet is significantly better . . . .”

On this news, the remaining artificial inflation was removed from MGM’s stock price, causing a

14.48% drop to $1.89.

186. In response to these disclosures concerning MGM’s precarious financial condition,

the Company’s stock price plummeted for five consecutive trading days, beginning on February 27,

2009 and continuing through March 5, 2009, as the following chart demonstrates:

Date Price Volume Change2/27/09 $3.50 8,098,087 -21.35%3/2/09 $3.05 9,183,185 -12.86%3/3/09 $2.62 9,734,884 -14.10%3/4/09 $2.21 9,916,307 -16.65%3/5/09 $1.89 7.418,728 -14.48%

187. Similarly, the MGM Notes purchased by Plaintiff PMT tumbled in price during this

same period.

188. Indeed, as the following chart demonstrates, from February 3, 2009 through March 4,

2009, the value of Lead Plaintiff PMT’s notes declined between 30% and 81%:

Decline as the Truth was DisclosedMGM Note (2/3/09 – 3/4/09)

5.875% MGM Note, due 02/27/14 -45%6.0% MGM Note, due 10/1/09 -49%

6.625% MGM Note, due 7/15/15 -39%6.75% MGM Note, due 9/1/12 -45%6.75% MGM Note, due 4/1/13 -44%



8.5% MGM Note, due 09/15/10 -42%

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POST-CLASS PERIOD EVENTS

189. On March 22, 2009, an affiliate of Dubai World – MGM’s transaction partner and a

significant shareholder of the Company – commenced an action in the Delaware Court of Chancery

entitled Infinity World Development Corp. v. MGM Mirage, et al., Civil Action No. 4438, alleging

that MGM had breached the terms of their joint venture agreement (the “Dubai World Complaint”).

The Wall Street Journal reported that the “highly touted” “long-term partnership” between MGM

and Dubai World was “in danger of blowing up.” Indeed, Defendants touted the partnership as a

“seminal event, absolutely transformational” and the “most historic transaction in our Company’s

history” and told investors that it “evaporate[d] [MGM’s] risks.” And just several days earlier,

during MGM’s March 17, 2009 earnings conference call for the fourth fiscal quarter of 2008,

Defendant Murren described the Company’s relationship with Dubai World as “outstanding” and

noted that it “has been since August ‘07 when we consummated the joint venture.” The Dubai

World Complaint, however, painted a far different picture.

190. In essence, the Dubai World Complaint alleged that MGM’s admissions of the dire

nature of its financial condition, as detailed in its March 17, 2009 Form 10-K for the year ended

December 31, 2008, constituted an “Event of Default” under the joint venture agreement. In fact, as

the Delaware Complaint alleges, MGM disclosed in the Form 10-K that “substantial doubt” existed

as to its ability to continue as a going concern, as follows:

“There is substantial doubt about our ability to continue as a going concern.(emphasis in original) The uncertainties described above regarding 1) our ability tomeet our financial commitments, and 2) our potential noncompliance with financialcovenants under our senior credit facility, raise a substantial doubt about our abilityto continue as a going concern. . . . As a result, the report of our independentregistered public accounting firm on our consolidated financial statements for theyear ended December 31, 2008 contains an explanatory paragraph with respect to ourability to continue as a going concern.”

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191. The Dubai World Complaint also quoted a statement from the Form 10-K in which

Deloitte & Touche, LLP, MGM’s independent auditor, confirmed its substantial doubt about the

Company’s ability to continue as a going concern, as follows:

“We have also audited, in accordance with the standards of the Public CompanyAccounting Oversight Board (United States), the consolidated financial statementsand financial statement schedule as of and for the year ended December 31, 2008.Our report dated March 17, 2009 expressed an unqualified opinion on those financialstatements and financial statement schedule and included . . . an explanatoryparagraph expressing substantial doubt about the Company’s ability to continue as agoing concern.”

192. Moreover, the Dubai World Complaint alleged that MGM made “misrepresentations

and [exhibited] a lack of candor regarding its financial well-being” and misrepresented the

accuracy of CityCenter’s construction budget. The Dubai World Complaint further alleged that

MGM grossly underestimated “costs, available financing, and project size[,]” as well as its

“estimates of revenue and EBITDA.”

193. The Dubai World Complaint also alleged “MGM provided an estimate of $7.488

billion to complete CityCenter” in August 2007, which it later increased to “$8.8 billion” contrary

to defendants’ public statements that the cost was no higher than $8.1-$8.4 billion. The Dubai

World Complaint also alleged an “anticipated financing package for CityCenter of $5 billion,

subsequently revised it to $3 billion, and then ultimately raised only $1.8 billion.” The Dubai World

Complaint further alleged:

Despite repeated concerns expressed by Plaintiff about the escalating costs of theCityCenter project, MGM has continued to push forward excessively spendingwithout regard to appropriate accountability. The increases described above aresubstantially higher than MGM originally presented to Infinity, even though theproject has been materially scaled back from what was originally presented toInfinity. These cost overruns, many of which were not shared with Plaintiff prior totheir incurrence, demonstrate MGM’s lack of candor in the management of thedevelopment of the CityCenter project.

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194. The Dubai World Complaint also provided examples of Defendants’

misrepresentations concerning their estimates of revenue and EBITDA. For example, according to

the Dubai World Complaint, “MGM estimated total revenue of $2.173 billion with total EBITDA of

$716 million and EBITDA after capital expenditure of $674 million” in October 2008, as compared

to “MGM’s March [2009] estimates of revenue of $1.640 billion (down $533 million), EBITDA of

$501 million (down $215 million) and EBITDA after capital expenditures of $459 million (down

$215 million).”8

195. Perini also sued MGM. In Perini’s lawsuit against MGM, it sought $492 million for

unpaid construction work on CityCenter (the “Perini Complaint”).9 The Perini Complaint alleged

costs grew as MGM demanded “numerous design changes and substantial Project modifications.”

Perini alleged that MGM delivered those changes anywhere from 132 to 520 days late, and

continued making changes “well after the agreed upon dates,” adding $500 million to the project tab.

The allegations contained in Perini’s (and Dubai World’s) complaints strongly corroborate many of

the statements made by Lead Plaintiffs’ Confidential Witnesses set forth herein. These allegations

also provide additional evidence of Defendants’ scienter, and provide additional reasons why

Defendants’ Class Period statements were false and misleading when made.

196. Specifically, the Perini Complaint states that when Perini and MGM first entered into

a Construction Agreement to build CityCenter on March 9, 2005, MGM “contemplated a project 1)

substantially smaller in scope than ultimately designed and constructed, 2) with conventional

8 The Dubai World Complaint was dismissed a month later after MGM and Dubai Worldreached an agreement with lenders to fund CityCenter.

9 Perini Building Co., Inc. v. MGM Mirage Design Group, et al., Case No. A- 10-612676-B (inthe Eighth Judicial District Court of the State of Nevada in and For the County of Clark).

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building geometry, and 3) with finishes commensurate with or below the finishes in the Bellagio

Hotel.” The complaint goes on to allege that costs increased on the contract “[t]hrough numerous

design changes and substantial Project modifications directed by MGM.” Perini alleged the cost

increases were caused by MGM’s changes in the design of CityCenter, “including 1) in excess of

two million square feet of additional finished space and in excess of one million square feet of

additional garage space, 2) dramatic, unique and extremely costly building geometry, and 3) lavish

and one-of-a-kind finishes throughout the Project that exceeded the Bellagio Hotel finishes.”

197. Under the Construction Agreement, MGM was required to deliver to Perini

completed designs per a specific schedule, yet MGM was consistently and materially late in

delivering the designs – by anywhere from 132 to 520 days, as demonstrated in the chart below:

DUE DATE PER GMP BASED APPROX.PROJECT AGREEMENT DESIGN DELIVERY DELAY IN DAYS

DATEAria Tower 04/09/2007 10/08/2007 182Aria Podium 04/12/2007 11/28/2007 230Convention Center 08/01/2007 02/19/2008 202Showroom 04/27/2007 11/13/2007 200Sinatra Garage 07/10/2006 08/01/2007 387Vdara 06/12/2007 10/22/2007 132Central Plant 02/28/2006 08/02/2007 520Mandarin 01/24/2007 09/27/2007 246Garage 5 06/13/2006 09/13/2007 457Harmon 03/13/2007 01/26/2008 322Crystals 01/15/2007 10/22/2007 280Veer 06/01/2007 11/05/2007 157

198. And, as alleged by Perini, even after delivering the designs so late, MGM continued

to make substantial changes to the designs through the completion of CityCenter, resulting in a price

increases.

199. The Construction Agreement also set forth a procedure and protocol for timely review

and processing of change orders on CityCenter. According to Perini, MGM failed to adhere to these

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procedures and protocols. Further, MGM was required to implement and manage an online project

management software system to manage the change order process. However, Perini alleges MGM

also failed to properly implement and/or manage the software, resulting in inaccurate cost

forecasting and a failure to timely and properly process change orders. Perini claims that as a result

of MGM’s actions and omissions, approximately $400,000,000 of $500,000,000 in owner changes

remained unresolved at the time the Perini Complaint was filed.

200. Perini also alleged that on or about June/July 2008, “certain issues relating to the lack

of constructability of the design, as well as negligent third party inspection and alleged improper

installation of the steel reinforcing at the Harmon were discovered.” Further, from June/July 2008

through November 2008, Perini states that it and MGM “began working towards a mutually

acceptable remedy that would allow the Harmon to be constructed to a full 48 stories.” However,

according to Perini, in early December 2008, MGM “ unilaterally” decided that “1) the Harmon

would be reduced from 48 stories to 26 stories, which included the removal of the condominium

portion of the Harmon, and 2) it would defer the buildout of the hotel portion for one year.”

201. The Perini Complaint also alleges that “[i]n or about January 2009,” Perini became

aware that MGM was encountering “some financial difficulties” and was “continuing its efforts to

obtain additional financing.” This caused Perini to become concerned about MGM’s ability to fully

fund the project’s construction – so concerned that Perini sought assurances from MGM that it had

adequate financing to meet the current forecasted cost.

202. Specifically, MGM assured Perini that it had adequate resources to pay the forecasted

cost for CityCenter through: (1) contributions from Dubai World of $400 million; (2) MGM’s

contribution of $400 million; (3) Bank of America financing for $1.8 billion; (4) secured assets in

the form of Circus Circus and vacant land totaling $1.05 billion; and (5) more than $250 million in

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potential condominium deposits. MGM further assured Perini that MGM would pay Perini for the

work necessary to complete the project. However, Perini claims that as of March 24, 2010, MGM

owed Perini approximately $490 million under the Construction Agreement.

LOSS CAUSATION

203. The market for MGM’s publicly-traded securities was open, well-developed and

efficient at all relevant times. As a result of Defendants’ materially false and misleading statements

and failures to disclose as alleged herein, MGM’s publicly-traded securities traded at artificially

inflated prices during the Class Period. Plaintiffs and other members of the Class purchased or

otherwise acquired MGM securities relying upon the integrity of the market price of MGM’s

securities and market information relating to MGM, and have been damaged thereby.

204. Throughout the Class Period, Defendants engaged in a course of conduct that

artificially inflated MGM’s securities prices and operated as a fraud or deceit on Class Period

purchasers of MGM securities. Defendants achieved this façade of success, growth and strong

future business prospects by misrepresenting the Company’s true financial condition. Defendants’

false and misleading statements had their intended effect, causing MGM’s common stock to trade at

artificially inflated levels throughout the Class Period, reaching as high as $99.75 per share on

October 9, 2007. MGM’s Notes also traded at artificially inflated levels during the Class Period

because of Defendants’ false and misleading statements and omissions of material facts.

205. The economic loss, i.e., damages, suffered by plaintiffs and other members of the

Class was a direct result of Defendants’ scheme to artificially inflate MGM’s securities prices and

the subsequent significant decline in the value of MGM’s securities as the truth was revealed in a

series of partial disclosures.

206. When Defendants’ prior misrepresentations were disclosed and became apparent to

the market through a series of disclosures, MGM’s securities prices fell as the prior artificial

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inflation came out of MGM’s securities prices. By the time the market had fully digested these

disclosures, MGM’s common stock closed at $1.89 per share, and MGM’s Notes traded at a fraction

of their face values, on March 5, 2009. As a result of their purchases of MGM securities during the

Class Period, plaintiffs and other members of the Class suffered economic loss, i.e., damages, under

the federal securities laws.

207. Defendants’ false and misleading representations about the Company’s liquidity, the

cost to construct CityCenter and the Company’s ability to finance CityCenter caused and maintained

the artificial inflation in MGM’s securities prices throughout the Class Period until the facts about

the Company’s true financial condition were revealed to the market. These revelations did not

happen all at once, but rather were the result of investigation by investors, analysts, rating agencies

and journalists. The timing and magnitude of MGM’s securities price declines, as detailed herein,

combined with Defendants’ own false Class Period reassurances about MGM’s resilience in the face

of the credit market downturn, negate any inference that the loss suffered by plaintiffs was caused by

changed market conditions or other macroeconomic factors unrelated to Defendants’ fraudulent

conduct.

208. For example, on August 5, 2008, Lanni stated that the Company’s “‘track record of

successfully navigating through changing economic conditions is solid.’” Lanni continued, and

suggested that not only was the Company well-equipped to deal with changing economic conditions,

but that the tight credit markets actually served to benefit MGM. Specifically, he stated that: “it

allows [MGM] to get much more detailed into the drawings and when we do eventually begin

construction on these [CityCenter] properties, we’ll be in much better understanding of what the

actual cost will be and a chance of having overruns and what have you, obviously, would be

mitigated.” Lanni’s comments were nothing new to the market – they echoed those made by

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Defendant Murren, six months prior, on February 21, 2008, who stated that “[w]e are well aware of

what’s happening in the economy. . . . We’re well prepared to handle these challenges.” Not

surprisingly, given the consistent and positive nature of Defendants’ representations regarding the

Company’s performance in the face of tough market conditions, analysts embraced Defendants’

reassurances.

209. But MGM’s tune soon changed, and it began to hint at a darkening horizon. On

January 7, 2009, MGM issued a press release announcing, for the first time, that it was delaying the

CityCenter opening and substantially contracting its scope. Specifically, MGM stated that it was

postponing, “to late 2010” the opening of The Harmon Hotel & Spa, and cancelling “The Harmon

residential condominium component.” Baldwin attributed the foregoing to “contractor construction

errors.” The market reacted with concern to this disclosure. In response, the price of MGM

common stock declined 9.02% to $14.52 per share on nearly 3.6 million shares traded.

210. Concerns regarding MGM and CityCenter quickly grew. Less than one month after

the January 7, 2009 news, on February 3, 2009, Moody’s downgraded MGM’s credit rating from

Ba3 to B 1, and indicated that further downgrades could follow. Moody’s reported that MGM’s

debt/EBITDA level was “ ‘inconsistent with its prior rating’” and that “MGM’s liquidity remains

weak.” Moody’s further stated “that availability under the company’s $4.5 billion revolving credit

facility could drop below $300 million by year-end and would be insufficient to cover maturing bond

debt of $1.1 billion in 2010.” Moody’s continued, and noted that MGM’s “ratings remain[ed] on

review for further possible downgrade[,]” and that “[t]he review will focus on MGM’s plans to

shore-up its liquidity position and its ability to maintain a credit profile and financial flexibility

appropriate for a B1 rating. . . .”

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211. Oppenheimer followed suit that same day, and issued its own negative report on

MGM, stating that “funding for CityCenter’s completion,” the Company’s “liquidity,” and “looming

maturities” were of substantial concern.

212. Most troubling, however, was Citigroup’s response. The same day as the Moody’s

downgrade, Citigroup published a report that openly questioned MGM management’s

representations and stated that the “biggest question for MGM [is] financing for CityCenter while

managing its own balance sheet.” As a result of these announcements, and despite Defendants’

consistent statements to the contrary during the Class Period, MGM’s stock fell 14.51% to close at

$6.95 per share on February 3, 2009 on extremely heavy trading volume.

213. On February 27, 2009, the market learned that the state of affairs at MGM was much

worse than investors or even analysts had imagined – or Defendants had ever disclosed. In a

February 27, 2009 Form 8-K, MGM disclosed that it had “submitted a request to borrow $842

million under its $4.5 billion senior revolving credit facility, which amount represented, after giving

effect to $93 million in outstanding letters of credit, the total amount of unused borrowing capacity

available under its $7.0 billion senior credit facility.” Shockingly, the Company attributed the

necessity of the request to “the continuing instability in the capital markets and uncertain state of the

global economy” – the very factors that, mere months before, Defendant Lanni had stated were

working to the benefit of the Company. See ¶¶124, 142 and 152.

214. The analyst response was dramatic, and uniformly negative. Each of the three major

ratings agencies downgraded MGM and cautioned the market as to its future. For example, Moody’s

downgraded MGM again from B 1 to B3 and noted that the additional $842 million “will be barely

sufficient to fund the Company’s operations.” Standard & Poor’s and Fitch cut MGM’s credit

ratings “citing concerns about the casino operator’s liquidity and debt covenants.” These

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revelations, which stood in stark contrast to MGM’s prior assurances caused the Company’s stock to

fall an additional 21.35% on February 27, 2009 on unusually heavy volume of over 8 million shares.

215. Then, from March 3 to March 5, 2009, the market was presented with a series of

disclosures in rapid succession that fully and finally removed the remaining artificial inflation from

MGM stock. On March 3, 2009, MGM filed a Form 12b-25 with the SEC, disclosing that the

Company had delayed filing its Annual Report on Form 10-K due to severe liquidity problems and

an evaluation of its financial condition and liquidity needs, all of which contributed to the inability to

finalize its financial statements. The Company also disclosed that it could default under its senior

credit facility as a result of its potential noncompliance with the financial covenants thereunder, and

that it would seek a waiver or amendment of such provisions. As the Company noted, however, “[i]f

the Registrant is unable to negotiate such a waiver or amendment, a majority of the lenders under the

senior credit facility could accelerate repayment of borrowings under the senior credit facility and,

under certain circumstances, cross defaults could be triggered under the Registrant’s other debt

instruments.” MGM also disclosed for the first time that its financial statements for the year ended

2008 could contain a “going concern” qualification as a result of doubt concerning its ability to

continue as a viable entity.

216. The market response to the Company’s March 3, 2009 SEC filing was overwhelming

and negative. In a March 3, 2009 article entitled “MGM Mirage’s cash crunch; With credit line

tapped out, bonds and loans coming due, Chapter 11 seen as risk,” the Las Vegas Sun reported that

the Company was at risk for filing for bankruptcy protection, and that ratings agencies believed that

the Company was “likely to default on its bank loan this year because [its] debts are too high,

relative to earnings.” The article further posited that, absent an additional $1.2 billion in funding,

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MGM would be unlikely to “complete the [CityCenter] project.” In response to the news on that

day, the Company’s stock immediately fell over 14% on massive volume of over nine million shares.

217. The next day, the market – and press – continued to digest the news and punish the

price of MGM stock. On March 4, 2009, the Las Vegas Review-Journal published an article entitled

“SEC FILING: MGM Mirage in talks with lenders; Company says it will be in default if it can’t alter

payment structure.” The body of the article continued, and noted that MGM “could be facing a

bankruptcy filing if it can’t renegotiate better repayment terms with its lenders covering some $7

billion in loans.” The article also reported that a default under the senior secured credit facility

“could filter down and put all of MGM Mirage’s debt, which totals roughly $13.5 billion, into

default.” Finally, the article stated that “ Wall Street has begun speculating that MGM Mirage

might have to file for Chapter 11 bankruptcy protection to force a restructuring of its bank loans and

corporate debt.” The same day, Citigroup again lowered MGM’s target stock price from $2.50 to

.60 and reiterated a “Sell” rating on the stock. Analysts at KeyBanc Capital Markets downgraded

MGM to “Hold” from “Buy.” Finally, in a research note dated March 4, 2009, KeyBanc Capital

Markets wrote that, based on MGM management’s Class Period statements, “we failed to fully

appreciate the difficult position in which we find the Company today.” In response, MGM’s stock

price fell 15.65% on massive volume of nearly 10 million shares.

218. Finally, on March 5, as investors fully digested this dizzying assortment of news, the

broader market concluded that MGM “might have to file for Chapter 11 bankruptcy protection to

force a restructuring of its bank loans and corporate debt.” A March 5, 2009 Janney note reported,

“The company is suffering from a drastic drop in business into Las Vegas . . . as well as cost

overruns at its 50% owned City Center, and ill timed stock repurchases. All of these issues have the

company suffering from a significant debt burden that it may not be able to overcome.” It further

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stated, “CityCenter, which once started as a novel and exciting development on the Strip, has seen its

cost rise to a point that it could have potentially bankrupted the company.”

219. A Macquarie research note on MGM dated March 5, 2009 entitled “The lion weeps

tonight; downgrade to Underperform,” analysts Joel Simkins and Chad Beynon not only

downgraded the Company but went to great lengths to distinguish MGM’s “malaise” from other

gaming companies: “Although MGM’s malaise is unfortunate and will continue to cast a shadow

over the entire sector, we stress that not every company is built alike. We believe that regional

gaming operators such as Penn . . . and Ameristar are . . . doing quite well [and] while Wynn . . .

faces many of the same challenges as MGM does and is not well diversified, its balance sheet is

significantly better . . . .”

220. This news, which was known to Defendants during the Class Period, finally removed

the remaining artificial inflation from the Company’s stock price, causing a nearly 14.48% drop on

March 5, 2009. As a direct result of these disclosures regarding the true state of MGM’s liquidity

and the falsity about MGM’s previous Class Period representations about its actual business

prospects, MGM’s stock price dropped from a high of $99.75 on October 7, 2007 to as low as $1.89

on March 5, 2009. This precipitous decline removed the inflation from MGM’s stock price, causing

real economic loss to investors who had purchased the securities in reliance upon Defendants’

deceitful conduct during the Class Period.

221. Similarly, MGM’s Notes declined precipitously during February and March 2009, as

set forth supra in ¶188, as the inflation in the Notes was removed as Defendants’ fraud became

apparent.

222. As alleged herein, Defendants acted with scienter in that they knew that the public

documents and statements issued or disseminated in the name of the Company were materially false

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and misleading; knew that such statements or documents would be issued or disseminated to the

investing public; and knowingly and substantially participated or acquiesced in the issuance or

dissemination of such statements or documents as primary violations of the federal securities laws.

As set forth elsewhere herein in detail, Defendants, by virtue of their receipt of information, reports

and attendance at meetings reflecting the true facts regarding MGM, their control over, and/or

receipt and/or modification of MGM’s allegedly materially misleading misstatements and/or their

associations with the Company which made them privy to confidential proprietary information

concerning MGM, participated in the fraudulent scheme alleged herein.

223. CityCenter was MGM’s largest and most expensive development in its history.

Indeed, CityCenter was the largest privately-developed project in the United States, and, perhaps, the

world. CityCenter required billions of dollars and countless hours to build. CityCenter was MGM’s

core operation and largest transaction before, during and after the Class Period. Given CityCenter’s

size and Defendants’ constant discussion of the project, Defendants were well aware of all the facts

concerning CityCenter alleged herein.

224. In addition to the Insider Defendants’ knowledge of the Company’s false and

misleading statements based on the their receipt of information and the importance of CityCenter

and the Company’s balance sheet, Defendants’ SOX Certifications attached to MGM’s Forms 10-Q

and Forms 10-K also establish scienter. Defendants Lanni, D’Arrigo and Murren 10 certified that

they had personally reviewed MGM’s financial statements, designed and evaluated MGM’s

disclosure controls and evaluated MGM’s internal controls over financial reporting. Moreover,

10 Defendant Lanni certified each of MGM’s Forms 10-Q and Forms 10-K throughout the ClassPeriod. Defendant D’ Arrigo certified each Form 10-Q and Form 10-K with the exception of MGM’s2Q07 Form 10-Q, which was certified by Defendant Murren.

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Defendants Lanni, D’ Arrigo and Murren certified that the financial statements “[do] not contain any

untrue statement of material fact or omit to state a material fact necessary to make the statements

made, in light of the circumstances under which such statements were made, not misleading” and

“fairly present in all material respects the financial condition, results of operations and cash flows of

[MGM].” Such reviews and evaluations, if performed as represented, would have alerted the Insider

Defendants to the problems with MGM’s balance sheet and CityCenter’s skyrocketing costs.

225. The Insider Defendants either knew of the material misstatements or failed to perform

the required reviews and falsely represented that they had. In either case, defendants knew or

recklessly disregarded that the SOX Certifications Lanni, D’Arrigo and Murren signed were false

and misleading.

226. Further, during the 19-month long Class Period, Defendant Baldwin sold 502,962

shares of his personally-held common stock for proceeds of nearly $44 million, at prices near the

Class Period high price. These insider sales were unusual and suspicious in timing and amount in

that in the two and a half years before the Class Period and the approximate two-year period after the

Class Period, Defendant Baldwin sold zero shares. Moreover, Baldwin’s sales were relatively

substantial in comparison to his prior trading histories, as well as the number of shares that the

insiders retained after the sales.

227. Moreover, to help conceal MGM’s liquidity problems and their inability to timely

complete and finance CityCenter, Defendants violated SEC requirements by making false and

misleading disclosures, and omitting to make required disclosures in its financial statements. 11

11 “The term ‘financial statements’ as used in this regulation shall be deemed to include allnotes to the statements and all related schedules.” SEC Regulation S-X, Article 1, Rule 1-01(b),Application of Regulation S-X.

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According to SEC rules, such disclosures are necessary to prevent MGM’s financial statements from

being misleading. 12

228. Regulation S-K, Item 303, Management’s Discussion and Analysis of Financial

Condition and Results of Operations, required Defendants to disclose “any known trends or any

known demands, commitments, events or uncertainties that will result in or that are reasonably likely

to result in [MGM’s] liquidity increasing or decreasing in any material way. 13 If a material

deficiency is identified, indicate the course of action that [MGM] has taken or proposes to take to

remedy the deficiency. Also identify and separately describe internal and external sources of

liquidity, and briefly discuss any material unused sources of liquid assets.” Moreover, Item 303

required Defendants to “indicate those balance sheet conditions or income or cash flow items which

[MGM] believes may be indicators of its liquidity condition” and to discuss liquidity “both a long-

term and short-term basis” and “ in the context of [MGM’s] own business or businesses.” Further,

Item 303 required Defendants to “[d]escribe [MGM’s] material commitments for capital

expenditures as of the end of the latest fiscal period, and indicate the general purpose of such

commitments and the anticipated source of funds needed to fulfill such commitments” and to

“[d]escribe any known material trends, favorable or unfavorable, in [MGM’s] capital resources.

Indicate any expected material changes in the mix and relative cost of such resources. The

discussion shall consider changes between equity, debt and any off-balance sheet financing

arrangements.” Finally, Item 303 requires that if “[MGM] knows of events that will cause a material

12 See, e.g., SEC Regulation S-K, Item 303 and Accounting Principles Bulletin.

13 Item 303 defines liquidity as follows: “The term ‘liquidity’ as used in this Item refers to theability of an enterprise to generate adequate amounts of cash to meet the enterprise’s needs for cash.”

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change in the relationship between costs and revenues . . . the change in the relationship shall be

disclosed.”

229. As alleged herein, during the Class Period, Defendants violated these SEC mandates

by making false and misleading statements and omissions in MGM’s financial statements regarding

CityCenter’s construction costs, the resulting effect on the Company’s liquidity positions and

MGM’s ability to secure necessary capital resources and financing. The Defendants knew, or were

deliberately reckless in not knowing, the facts which indicated that all of the Company’s interim

financial statements, press releases, public statements, and financial filings with the SEC, which

were disseminated to the investing public during the Class Period, were materially false and

misleading for the reasons set forth herein. Had the true financial position and results of operations

of the Company been disclosed during the Class Period, the Company’s securities would have traded

at prices well below what they did during the Class Period.

CLASS ACTION ALLEGATIONS

230. Plaintiffs bring this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and 23(b)(3) on behalf of all those who purchased the publicly-traded securities of

MGM during the Class Period and who were damaged thereby (the “Class”). Excluded from the

Class are Defendants, the officers and directors of the Company, at all relevant times, members of

their immediate families and their legal representatives, heirs, successors or assigns and any entity in

which Defendants have or had a controlling interest.

231. The members of the Class are so numerous that joinder of all members is

impracticable. Throughout the Class Period, MGM’s publicly-traded securities were actively traded

on the New York Stock Exchange (“NYSE”) and elsewhere. While the exact number of Class

members is unknown to plaintiffs at this time and can only be ascertained through appropriate

discovery, plaintiffs believe that there are hundreds or thousands of members in the proposed Class.

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Record owners and other members of the Class may be identified from records maintained by MGM

or its transfer agent and may be notified of the pendency of this action by mail, using the form of

notice similar to that customarily used in securities class actions.

232. Plaintiffs’ claims are typical of the claims of the members of the Class as all members

of the Class are similarly affected by Defendants’ wrongful conduct in violation of federal law that is

complained of herein.

233. Plaintiffs will fairly and adequately protect the interests of the members of the Class

and have retained counsel competent and experienced in class and securities litigation.

234. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

(a) whether the federal securities laws were violated by Defendants’ acts as

alleged herein;

(b) whether statements made by Defendants to the investing public during the

Class Period misrepresented material facts about the business, operations and management of MGM;

and

(c) to what extent the members of the Class have sustained damages and the

proper measure of damages.

235. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the

damages suffered by individual Class members may be relatively small, the expense and burden of

individual litigation make it impossible for members of the Class to individually redress the wrongs

done to them. There will be no difficulty in the management of this action as a class action.

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APPLICABILITY OF PRESUMPTION OF RELIANCE:FRAUD ON THE MARKET DOCTRINE

236. At all relevant times, the market for MGM’s publicly-traded securities was an

efficient market for the following reasons, among others:

(a) MGM stock met the requirements for listing, and was listed and actively

traded on the NYSE, a highly efficient and automated market;

(b) As a regulated issuer, MGM filed periodic public reports with the SEC and the

NYSE;

(c) MGM regularly communicated with public investors via established market

communication mechanisms, including through regular disseminations of press releases on the

national circuits of major newswire services and through other wide-ranging public disclosures, such

as communications with the financial press and other similar reporting services; and

(d) MGM was followed by securities analysts employed by major brokerage firms

who wrote reports that were distributed to the sales force and certain customers of their respective

brokerage firms. Each of these reports was publicly available and entered the public marketplace.

237. As a result of the foregoing, the market for MGM’s securities prices promptly

digested current information regarding MGM from all publicly available sources and reflected such

information in MGM’s securities prices. Under these circumstances, all purchasers of MGM’s

securities during the Class Period suffered similar injury through their purchase of MGM’s publicly-

traded securities at artificially inflated prices and a presumption of reliance applies.

DEFENDANTS ARE NOT ENTITLED TO THE PROTECTIONSOF THE PSLRA’S SAFE HARBOR PROVISION

238. Defendants’ false and misleading statements and omissions do not constitute forward-

looking statements protected by the PSLRA’s safe harbor provision. Rather, as set forth herein,

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Defendants had actual, contemporaneous and/or historical knowledge of the facts and conditions

belying their false and misleading statements.

239. To fall within the protections of the PSLRA’s safe harbor provision, forward looking

statements must be accompanied by meaningful cautionary language tailored to the relevant risks.

Cautionary language cannot be meaningful when, as here, Defendants know that the potential risks

they have identified have in fact already occurred, and that the positive statements they are making

are false. In other words, Defendants’ contemporaneous knowledge of present risks belies the

effectiveness of any relevant purported risk disclosures. The safe harbor also does not insulate

statements based on historical or current facts that are misrepresented. Accordingly, if Defendants

know specific risks and uncertainties stated to be “potential” in cautionary language have already

been realized, as they did here, then their forward-looking statements are not protected by the safe

harbor.

CAUSES OF ACTION

COUNT I

For Violation of §10(b) of the Exchange Actand Rule 10b-5 Against MGM and the Insider Defendants

240. Lead Plaintiffs incorporate ¶¶1-239 by reference.

241. During the Class Period, MGM and the Insider Defendants disseminated or approved

the false statements specified above, which they knew or deliberately disregarded were misleading in

that they contained misrepresentations and failed to disclose material facts necessary in order to

make the statements made, in light of the circumstances under which they were made, not

misleading.

242. MGM and the Insider Defendants violated § 10(b) of the Exchange Act and Rule 10b-

5 in that they:

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(a) employed devices, schemes and artifices to defraud;

(b) made untrue statements of material facts or omitted to state material facts

necessary in order to make the statements made, in light of the circumstances under which they were

made, not misleading; or

(c) engaged in acts, practices and a course of business that operated as a fraud or

deceit upon Lead Plaintiffs and other similarly situated in connection with their purchases of MGM

publicly-traded securities during the Class Period.

243. Lead Plaintiffs and the Class have suffered damages in that, in reliance on the

integrity of the market, they paid artificially inflated prices for MGM publicly-traded securities.

Lead Plaintiffs and the Class would not have purchased MGM publicly-traded securities at the prices

they paid, or at all, had they been aware that the market prices for MGM’s securities had been

artificially inflated by MGM and the Insider Defendants’ materially false and misleading statements.

244. As a direct and proximate result of Defendants’ wrongful conduct, Lead Plaintiffs and

the Class suffered damages in connection with their respective purchases of the Company’s publicly-

traded securities during the Class Period.

COUNT II

For Violation of §20(a) of the Exchange ActAgainst the Insider Defendants

245. Lead Plaintiffs incorporate NN1-244 by reference.

246. During the Class Period, the Insider Defendants acted as controlling persons of MGM

within the meaning of §20(a) of the Exchange Act. By reason of their high-level positions with the

Company, participation in and/or awareness of the Company’s operations, direct involvement in the

day-to-day operations of the Company, and/or intimate knowledge of the Company’s actual

performance, the Insider Defendants had the power to influence and control and did influence or

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control, directly or indirectly, the decision-making of the Company, including the content and

dissemination of the materially false and misleading statements alleged herein.

247. By reason of such conduct, the Insider Defendants are liable pursuant to §20(a) of the

Exchange Act. As a direct and proximate result of the Insider Defendants’ wrongful conduct, Lead

Plaintiffs and the Class suffered damages in connection with their respective purchases of the

Company’s publicly-traded securities during the Class Period.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs pray for relief and judgment, as follows:

A. Determining that this action is a proper class action, designating Lead Plaintiffs as

class representatives under Rule 23 of the Federal Rules of Civil Procedure and Lead Plaintiffs’

counsel as Lead Class Counsel;

B. Awarding compensatory damages in favor of Plaintiffs and the other Class members

against all Defendants, jointly and severally, for all damages sustained as a result of Defendants’

wrongdoing, in an amount to be proven at trial, including interest thereon;

C. Awarding Plaintiffs and the Class their reasonable costs and expenses incurred in this

action, including counsel fees and expert fees; and

D. Awarding all equitable and other relief as the Court may deem just and proper.

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JURY TRIAL DEMANDED

Plaintiffs hereby demand a trial by jury on all claims and issues so triable.

DATED: January 14, 2011 ROBBINS GELLER RUDMAN& DOWD LLP

DARREN J. ROBBINSARTHUR C. LEAHYBRIAN O. O’MARA (Nevada Bar #8214)RYAN A. LLORENS

s/ Brian O. O’Mara BRIAN O. O’MARA

655 West Broadway, Suite 1900San Diego, CA 92101Telephone: 619/231-1058619-231-7423 (fax)

DATED: January 14, 2011 BARROWAY TOPAZ KESSLERMELTZER & CHECK, LLP

RAMZI ABADOUCHRISTOPHER L. NELSONSTACEY M. KAPLANERIK D. PETERSON

s/ Ramzi Abadou RAMZI ABADOU

580 California Street, Suite 1750San Francisco, CA 94104Tel.: 415/400-3000Fax: 415/400-3001

DATED: January 14, 2011 NIX PATTERSON & ROACH, LLPBRADLEY E. BECKWORTHJEFFREY J. ANGELOVICHSUSAN WHATLEYBRAD E. SEIDELLISA BALDWIN

s/ Bradley E. Beckworth BRADLEY E. BECKWORTH

- 101 -593341_1


205 Linda DriveDaingerfield, TX 75638Tel.: 903/645-7333Fax: 903/645-4415

Lead Counsel for Plaintiffs

GOODMAN LAW GROUPROSS C. GOODMAN520 South Fourth Street, 2nd FloorLas Vegas, NV 89101Tel.: 702/383-5088Fax: 702/385-5088

LAW OFFICES OF CURTIS B. COULTER,P.C.CURTIS B. COULTER (Nevada Bar No. 3034)403 Hill StreetReno, NV 89501Tel.: 775/324-3380Fax: 775/324-3381

Liaison Counsel

KEIL & GOODSON, PAMATT C. KEILJOHN W. GOODSON611 Pecan StreetTexarkana, AR 71854Tel.: 870/772-4113Fax: 870/773-2967

Additional Counsel for Arkansas TeacherRetirement System

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CERTIFICATE OF SERVICE

I hereby certify that on January 14, 2011, I authorized the electronic filing of the foregoing

with the Clerk of the Court using the CM/ECF system which will send notification of such filing to

the e-mail addresses denoted on the attached Electronic Mail Notice List, and I hereby certify that I

caused to be mailed the foregoing document or paper via the United States Postal Service to the non-

CM/ECF participants indicated on the attached Manual Notice List.

I certify under penalty of perjury under the laws of the United States of America that the

foregoing is true and correct. Executed on January 14, 2011.

s/ Brian O. O’Mara BRIAN O. O’MARA

ROBBINS GELLER RUDMAN& DOWD LLP

655 West Broadway, Suite 1900San Diego, CA 92101-3301Telephone: 619/231-1058619/231-7423 (fax)

E-mail :[email protected]

593341_1

CM/ECF - nvd - District Version 4.0.3- Page 1 of 2Case 2:09-cv-01558-GMN-LRL Document 94 Filed 01/14/11 of 106

Mailing Information for a Case 2:09-cv-01558-GMN-LRL

Electronic Mail Notice List

The following are those who are currently on the list to receive e-mail notices for this case.

• Ramzi [email protected],[email protected],[email protected],[email protected]

• Jeffrey Simon [email protected]

• Ze'eva K [email protected],[email protected]

• Todd L. [email protected],[email protected]

• Curtis B. [email protected] ,[email protected]

• Charles C. [email protected]

• Lee A. [email protected],[email protected]

• Jack G [email protected]

• George M [email protected]

• Ross C [email protected] ,[email protected]

• Griffith H [email protected],[email protected]

• Robert W. [email protected]

• Christopher [email protected]

• Brian O. O'[email protected],[email protected] ,[email protected]

• David C [email protected],[email protected]

https://ecf.nvd.uscourts.gov/cgi-bin/MailList.pl?446321903857927-L_366_0-1 1/14/2011

CM/ECF - nvd - District Version 4.0.3- Page 2 of 2Case 2:09-cv-01558-GMN-LRL Document 94 Filed 01/14/11 of 106

• Erik [email protected] ,[email protected]

• Jarrod L. [email protected] ,[email protected] ,[email protected]

• David [email protected]

• Samuel H. [email protected] ,[email protected]

• Joseph [email protected]

• M Nelson [email protected],[email protected],[email protected]

• James M [email protected]

Manual Notice List

The following is the list of attorneys who are not on the list to receive e-mail notices for this case (who thereforerequire manual noticing). You may wish to use your mouse to select and copy this list into your word processingprogram in order to create notices or labels for these recipients.

Stacey M. KaplanBarroway, Topaz, Kessler, Meltzer & Check, LLP580 California Street, Suite 1750San Francisco, CA 94104

https://ecf.nvd.uscourts.gov/cgi-bin/MailList.pl?446321903857927-L_366_0-1 1/14/2011

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