• HG Vora is attacking PENN Entertainment once again
• The conflict stems from the omission of one of the candidates for the Board of Directors
• HG Vora accuses PENN of self-servingly limiting shareholders' powers

A lawsuit has been filed against PENN Entertainment by activist investor HG Vora, who has become a vociferous critic of the company and its management practices.

HG Vora is back up arms against PENN’s top management

After what appeared to be an appeasement between the two parties, HG Vora is back on the offensive again, accusing PENN of failing to uphold "shareholder democracy" whereby shareholders may suggest and put forward candidacies for consideration of the company’s Board of Directors, and thus have a wider impact on the company’s overall direction.

In the lawsuit, filed with the US District Court for the Eastern District of Pennsylvania, HG Vora specifically argues that PENN stopped the shareholder from placing three members on the company’s Board of Directors.

"HG Vora believes the Board’s manipulation of the Company’s election rules is an affront to shareholder democracy and only benefits its incumbent directors, notably its Chairman and CEO. HG Vora believes that substantial changes are necessary to restore accountability and ensure all options are considered to maximize shareholder value," HG Vora said.

HG Vora has been attacking the company’s management, questioning payment practices and the current operational results which have seen PENN, time and again, deliver on underwhelming core metrics with the ESPN Bet brand.

HG Vora argues that PENN breached fiduciary duties having reduced the number of candidates placed on the Board of Directors from three to two. Specifically, the activist-investor wanted to see William J Clifford join the Board of Directors, but this was denied.

PENN did move forward with the appointment of Johnny Hartnett, former Superbet CEO, and Carlos Ruisanchez, Sorelle Capital CEO, as members, however.

Shareholder democracy compromised, self-serving interests suspected

There is more to the complaint as well, as HG Vora alleges that PENN had breached federal securities laws making false and misleading statements and omissions in proxy materials.

According to the activist-investor, in announcing Ruisanchez and Harnett’s additions to the Board, PENN issued a statement that made it looked like HG Vora had agreed to this arrangement, whereas the investor argues this is not true as Clifford is notably missing.

HG Vora accuses PENN of having acted in self-interest and without any legitimate cause.

"PENN’s Board Reduction Scheme, implemented amidst a contested election and while facing the prospect of losing three Board seats, is, in HGVora’s view, a self-serving action with no legitimate corporate purpose," an official statement by the activist-investor read.

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