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Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 1 of 92

KESSLER TOPAZ NIX PATTERSON & ROACH, LLP MELTZER & CHECK, LLP BRADLEY E. BECKWORTH (Pro Hac Vice) RAMZI ABADOU (Pro Hac Vice) JEFFREY J. ANGELOVICH (Pro Hac Vice) STACEY M. KAPLAN (Pro Hac Vice) SUSAN WHATLEY (Pro Hac Vice) ERIK D. PETERSON (Pro Hac Vice) BRAD E. SEIDEL (Pro Hac Vice) 580 California Street, Suite 1750 LISA P. BALDWIN (Pro Hac Vice) San Francisco, CA 94104 205 Linda Drive Tel: 415/400-3000 Daingerfield, TX 75638 Fax: 415/400-3001 Tel.: 903/645-7333 Fax: 903/645-4415 ROBBINS GELLER RUDMAN & DOWD LLP ARTHUR C. LEAHY (Pro Hac Vice) BRIAN O. O’MARA (SBN 8214) RYAN A. LLORENS (Pro Hac Vice) 655 West Broadway, Suite 1900 San Diego, CA 92101 Tel.: 619/231-1058 Fax: 619/231-7423

Lead Counsel for Plaintiffs [Additional counsel appear on signature page.]

UNITED STATES DISTRICT COURT

DISTRICT OF

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

This Document Relates To: FIRST AMENDED COMPLAINT FOR VIOLATIONS OF FEDERAL SECURITIES ALL ACTIONS. LAWS

699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 2 of 92

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 Period”).

Lead Plaintiffs’ allegations are based upon the investigation conducted by Lead Plaintiffs’ counsel, which included a review of 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 AND SUMMARY OF THE ACTION

1. In November 2004, MGM announced an ambitious plan to build CityCenter, the largest privately developed construction project in 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 and , several 400-room, non-gaming , 1,650 units of luxury condominiums (later increased to 2,650 units), and 550,000 square feet of retail, dining and - 1 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 3 of 92

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 it was scheduled to open in 2010. 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 had increased by 670,000 square feet. And, 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. 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 misleadingly tout 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 the world credit

markets. Defendants chose the former.

3. 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 - 2 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 4 of 92

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.

4. 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 lending institutions 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.

5. 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 increasingly

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%. Further, MGM took those

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

That is, MGM’s publicly announced estimates for the CityCenter project were knowingly - 3 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 5 of 92

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

slashed by hundreds of millions of dollars 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.

6. 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 Hotel (the “Harmon”) 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 structure.

Matters got so bad for MGM that it 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.

7. 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.

8. 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 - 4 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 6 of 92

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

lack of candor. Dubai World’s complaint confirmed 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. Defendant Baldwin fared far better, selling over 500,000 of his MGM shares during the Class Period for illicit insider trading proceeds of over $43.8 million. Towards the end of the Class Period, as the truth regarding MGM’s

true financial condition was being revealed, analysts at KeyBanc Capital Markets downgraded MGM

to “Hold” from “Buy.” In a research note dated March 4, 2009, KeyBanc Capital Markets wrote

that, based on MGM management’s Class Period statements, “[w]e 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.

JURISDICTION AND VENUE

9. 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.

10. 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.

11. 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

12. 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.

13. 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.

14. 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.

15. 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

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

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

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

Vegas Boulevard South, , 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

17. Lanni served as MGM’s Chairman of the Board of Directors (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

- 7 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 9 of 92

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

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

and a Board Member. 1

18. 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.

19. 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.

20. Baldwin served as President and CEO of , 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,

1 Defendants filed a Notice of Death on Mr. Lanni’s behalf on July 20, 2011 (Dkt. No. 139). On October 18, 2011, Lead Plaintiffs filed a Motion to Strike the Notice of Death (Dkt. No. 141). The Motion to Strike was fully briefed as of December 12, 2011. See Dkt. No. 150.

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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.

21. The defendants referenced above in ¶¶17-20 are referred to herein as the “Insider

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

“Defendants.”

22. 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.

23. 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 - 9 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 11 of 92

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.

24. 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.

25. 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.

26. 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, - 10 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 12 of 92

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.

CONFIDENTIAL WITNESSES

27. 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, which were “operational in nature,” occurred during the Class

Period every Thursday morning at either 8 a.m. or 10 a.m. These meetings were scheduled to last

for two hours, and always lasted at least “a solid hour.”

28. CW1, Nordling, and the “top guys” from Perini Building Company (“Perini”),

Tishman Construction (“Tishman”) and Gensler were among the attendees. 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.

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

contractor hired to build CityCenter – and worked on the CityCenter project from 2006 until - 11 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 13 of 92

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

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.

30. 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.

31. 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, on the 25th of each month during

the Class Period, senior MGM executives, including Defendant Baldwin, received three “monthly progress reports” 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 - 12 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 14 of 92

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

32. 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 performed work on CityCenter.

33. 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 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.

34. 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 - 13 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 15 of 92

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

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

during which 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.

35. 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.

36. 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 - 14 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 16 of 92

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

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 Architects, 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.

37. 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.

38. 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 - 15 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 17 of 92

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.

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

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

stated that the Tower received several NCRs in the winter of 2007. County officials notified Perini

that if the 15 outstanding NCRs 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 NCRs that were unresolved and dated back two years .

40. 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.”

41. In addition, CW9 learned that MGM was having cash flow problems either in third

quarter or fourth quarter 2008 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,

- 16 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 18 of 92

around the time that the City of Las Vegas issued the Notices of Violation regarding the Harmon

(July 2008 through September 2008).

42. 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 Act of 2002 (“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.

43. 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.

- 17 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 19 of 92

DEFENDANTS’ RECKLESS AND/OR KNOWING FALSE AND MISLEADING STATEMENTS AND OMISSIONS2

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

serious signs of weakness and warning signs of deeper 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, unbeknownst to investors, MGM was plodding along on a disastrous course that would eventually lead the Company to the precipice of

financial ruin.

August 2, 2007

45. 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. 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, stating “ we are very pleased with the quality of the

development and the pace of residential sales, and we continue on track for a late 2009 opening .”3

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

3 Text in bold and italics reflect specific statements Lead Plaintiffs allege herein are independently false and misleading. These statements, as well as the material information Defendants omitted to disclose, render Defendants’ broader statements concerning the CityCenter development and MGM’s exposure to the deteriorating credit markets materially false and misleading.

- 18 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 20 of 92

During MGM’s second quarter earnings conference call, Lanni also falsely represented to investors

that “construction is progressing nicely ” at CityCenter, and that the project was “ on-budget and on-

track for a late 2009 opening .”

46. Despite these positive assurances to the market, Defendants knew the construction progress on CityCenter was not on schedule or on budget. 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 always lasted at least “a solid hour.” CW1 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 cost analyses, construction

operations, building designs and scheduling matters.

47. At these meetings, Baldwin learned that 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 CW1, 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.

48. 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 - 19 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 21 of 92

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.

49. In addition, Defendants knew the construction cost estimate for CityCenter of $7.4 billion was grossly understated and MGM was not on budget. According to CW1, 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 CW1.

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 CW1, 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.

50. CW3 confirmed that 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 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 - 20 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 22 of 92

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.

51. Moreover, CW6 stated that MGM purposely directed that the construction cost

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.

52. 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. CW10 also confirmed

that MGM conducted SOX audit reports and risk assessment reports in the first quarter of 2007 and

first quarter of 2008, which listed the CityCenter project as the number-one risk facing the Company.

53. During the same August 2, 2007 conference call referenced in ¶45, supra, Murren

also falsely 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 cash equity, we believe will be more than sufficient to raise the bank debt capital that we expect will largely fund the project, and between Kerzner and MGM Mirage as sponsors, the ability for us to raise money in the bank market is I don’t think, I don’t think has any question. And we could do that today if we felt like it . - 21 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 23 of 92

54. 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

misleadingly represented that MGM’s joint venture partners were not exposed to the fluctuating

credit markets:

[Jim Murren:] Well the folks we are talking to, Felicia, are not looking at the CMBS market. The folks we are talking to are very, very large strategic partners, nongaming strategic partners. And other investors that are not dependent upon the day-to-day fluctuation of the credit markets. The work that we are doing which is constant, has not abated whatsoever in the past month.

55. 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. Murren also stated that “[b]etween our bank facility, which

is large, the largest in our industry, and our cash flows, we feel very comfortable about our financial

needs over the coming period of time [and] when we go out and do deals, we are not the kind of joint venture partner, that needs to access the CMBS market, or the bond market .”

56. Contrary to Defendants’ false and/or misleading statements in ¶¶53-55, supra,

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 CW10, information in the “annual risk assessment” reports that

went to all the Insider Defendants and the Board in the first quarter of 2007 and 2008 indicated that

as of the first quarter of 2007 and 2008, CityCenter was the number-one risk to the Company. And, - 22 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 24 of 92

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

condensed into a five-year timeline.

57. Defendants’ false and misleading statements also falsely assured analysts. 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

[CityCenter] is on track and is still scheduled to open in late 2009.”

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

statements alleged in ¶¶45, 53-55, supra, 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. Moreover, as the market digested this information, the Company’s

stock price continued to rise, 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 announcements.

August 9, 2007

59. On August 9, 2007, MGM filed with the SEC its quarterly report on Form 10-Q for

the second quarter ended June 30, 2007 which 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 .” - 23 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 25 of 92

60. These statements, which reaffirmed Defendants’ August 2, 2007 misstatements

concerning CityCenter’s progress, budgeting and cost (referenced above in ¶¶45, 53-55), were

knowingly false and misleading when made because 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. For example, according to CW1, and as set forth above in

¶¶27-28, MGM’s constant design changes while construction was already in progress led to

constantly increasing construction costs. Additionally, 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).

61. CW2 corroborates that 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. Moreover, according to CW6, MGM purposely directed that the construction

cost estimates for CityCenter be created in a way contrary to the customary practices in the

construction industry, which resulted in intentionally underestimated costs. Finally, according to

CW7, when CW7 submitted accurate, agreed-on cost 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 because Defendants knew the publicly-

announced construction cost estimate for CityCenter of $7.4 billion was grossly understated,

Defendants also knew that their public statements that the net construction cost for CityCenter would be $4.7 billion were also understated.

62. 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 - 24 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 26 of 92

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].”

63. The SOX certifications that Lanni and Murren signed and attached to MGM’s Form

10-Q for the second quarter ended June 30, 2007, were false and misleading because 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 understatement of construction

costs for CityCenter; and (ii) that internal controls over financial reporting were inadequate.

64. 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. 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 . . . .

- 25 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 27 of 92

This transaction is immediately accretive to long term earnings and will have a profound impact on our balance sheet. Dubai World is making a significant investment in our company that will greatly increase our growth and earnings . We welcome Dubai World’s long term commitment to our company through the joint venture and these share purchases . . . .

65. 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-

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

Defendants, as they did with respect to Lead Plaintiffs and the market, made “misrepresentations and

[exhibited a] lack of candor regarding its financial well-being.”

66. Almost immediately 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.

October 1, 2007 and October 30, 2007

67. 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 false 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.

68. On October 30, 2007, MGM issued a press release announcing “record” financial

results for its third fiscal quarter. Insider Defendant D’Arrigo misleadingly emphasized that the

Company had ample access to capital under its existing credit facility:

- 26 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 28 of 92

Following the transactions with Dubai World, we will have significant borrowing capacity under our senior credit facility and no significant debt maturities in 2008 .

69. In addition to this barrage of good news and positive reassurance from Defendants,

MGM also announced that the CityCenter’s “construction budget ha[d] increased from $7.4 billion

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

however, 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 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.

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

earnings conference call with analysts and investors. During the call, 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 World for 50% of CityCenter. It should be noted that we will continue to be the developer of that project. Once again, we will operate CityCenter, and we will receive a management fee for doing that. This transaction truly represents a paradigm in our growth strategy. With us joining a strategic financial partner in Dubai World to leverage our management ability and real estate asset is the most effective way possible that we could even think of .

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

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

quality of the construction:

- 27 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 29 of 92

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

72. 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

were already on sale and would be opened to the public starting “in early 2008.” In contrast to these

representations, Defendants knew the increase in the CityCenter budget from $7.4 billion to $7.8 billion was not due “largely” 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.

73. Also on October 30, 2007, Murren commented on Dubai World’s recent investment

in CityCenter in a Reuters news article. Murren falsely 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 cost off MGM’s balance sheet. These

statements were made as the credit crisis continued to intensify. Unbeknownst to investors,

however, 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, - 28 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 30 of 92

according to CW10, as of the first quarter of 2007 and 2008, CityCenter was the number one risk to the Company, and CityCenter was problematic because it was an eight- to 10-year project that was condensed into a five-year timeline. Defendants knew MGM’s past financial performance was not a reasonable indicator of future trends in the industry, and 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 stated. In fact, the prospects of obtaining the desired financing for

CityCenter were diminishing as the credit crunch expanded and deepened.

December 6, 2007

74. On December 6, 2007, Lanni once again touted MGM’s joint venture with Dubai

World in a MarketWatch news article. Lanni misleadingly 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 stating:

“‘ we are partnering with a bank .’” Lanni ranked the agreement as perhaps the biggest success of his decades in the casino industry. 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.

75. Defendants’ statements on December 6, 2007 concerning MGM’s partnership with

Dubai World and the Company’s access to capital (referenced above in ¶74) were knowingly false and misleading when made because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) Defendants knew MGM did not have sufficient “financial flexibility” to weather deteriorating economic conditions, because the availability of capital under - 29 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 31 of 92

MGM’s credit facility was contingent on the Company’s financial results, which were vulnerable to

an industry slowdown; and (ii) 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 CW10, as of the first quarter of 2007 and 2008, CityCenter was the number one

risk to the Company, and CityCenter was problematic because it was an eight- to 10-year project that

was condensed into a five-year timeline. Because of this, everything on the project had to happen perfectly or else the schedule would get thrown off and costs would increase significantly.

76. 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.

77. On January 9, 2008, MGM released more purported 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 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.

February 7, 2008

78. 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: - 30 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 32 of 92

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 costs of CityCenter to be $300 million to $600 million higher than our previous estimate of $7.8 billion .

79. Defendants’ statements on February 7, 2008 concerning the budgeting and cost of the

CityCenter project (referenced above in ¶78) were knowingly false and misleading when made because 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 CW1, since CityCenter was a “fast-track” project,

CityCenter was being designed (and re-designed) in almost real-time as it was being constructed.

80. In addition, Defendants also 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, according to CW6 and CW7,

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. 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.

81. 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 if requested by MGM with

respect to CityCenter’s construction. Therefore, no GMP existed, as such changes could cause and - 31 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 33 of 92

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.

82. Moreover, 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 CW10, as of the first quarter of 2007 and 2008, CityCenter was the number one

risk to the Company, and CityCenter was problematic because it was an eight- to 10-year project that

was condensed into a five-year timeline. Because of this, everything on the project had to happen perfectly or else the schedule would get thrown off and costs would increase significantly.

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.

February 21, 2008

83. 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, D’Arrigo continued to highlight

the Company’s positioning, prospects and growth initiatives:

[D’Arrigo:] Our Company is financially well positioned to carry out planned growth initiatives , including reinvestment in our existing resorts, while at the same time maintaining a strong balance sheet . . . . Our capital allocation strategy remains sound , and will allow us to prudently expand our brands both domestically and in international markets, while maximizing shareholder value.

Murren also spoke positively of MGM’s prospects and reassured investors that, unlike its

competitors, the Company could handily withstand tough economic conditions:

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We’re well prepared to handle these challenges . Certainly, more so than any of our competitors here in Las Vegas or in the industry. And we feel like we have some good momentum , particularly as the year progresses as we get into the third and fourth quarter.

84. Later, on March 5, 2009, a Macquarie note entitled “The lion weeps tonight;

downgrade to Underperform,” stressed that MGM’s woes were far worse than those of its

competitors, stating: “we stress that not every company is built alike . . . regional gaming operators

such as Penn . . . and Ameristar . . . are doing quite well [and] [w]hile Wynn . . . faces many of the

same challenges as MGM does and is not well diversified, its balance sheet is significantly better . . . .”

85. On the conference call following the February 21, 2008 press release, Baldwin again

falsely represented that the development and construction of CityCenter remained “ on schedule .” 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 .” Defendants knew the cost

estimate to construct CityCenter at the time ($8.1-$8.4 billion), however, 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 CW1, since CityCenter was a “fast-track” project, CityCenter

was being designed (and re-designed) in almost real-time as it was being constructed.

86. 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 be limited. This is because a GMP contract – or “guaranteed maximum price” contract – is designed

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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.

87. Commenting on the Company’s maturing debt and the capital available under its senior credit facility, D’Arrigo also made falsely 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 credit facilities 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 recent tender, we have approximately $2.9 billion of availability under our senior credit facility .

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.”

(a) 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.” These statements were knowingly false when made. Defendants knew MGM did not have sufficient

“financial flexibility” to weather deteriorating economic conditions, because the availability of

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capital under MGM’s credit facility was contingent on the Company’s financial results, which were

vulnerable to an industry slowdown.

88. Defendants knew the CityCenter budget was 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. 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.

89. Moreover, 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

if requested by MGM with respect to CityCenter’s construction. Therefore, no GMP existed and, 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.

90. 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 CW10, as of the first quarter of 2007 and 2008, CityCenter was the number one risk to the

Company, and CityCenter was problematic because it was an eight- to 10-year project that was

condensed into a five-year timeline. Because of this, everything on the project had to happen perfectly or else the schedule would get thrown off and costs would increase significantly. In - 35 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 37 of 92

addition, 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.

March 5, 2008

91. 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 where they

falsely reaffirmed that CityCenter remained on time for a November 2009 opening and stated that

the $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 . 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.

92. Defendants’ statements on March 5, 2008 concerning the construction schedule and budgeting of the CityCenter project (referenced above in ¶91) were knowingly false and misleading

when made because they failed to disclose and/or misrepresented the following adverse facts:

(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

CW1, 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 CW1, there was “no time to sit down

and do really good math on the costs” beforehand; - 36 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 38 of 92

(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. And, 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

change orders that it was continually increasing the cost of constructing CityCenter and therefore the

GMP contracts would not cap construction costs; and

(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.

93. 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.” - 37 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 39 of 92

May 6, 2008

94. 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 took an optimistic tone and advised that “[o]ur business should be evaluated in the context of the state of the economy.” “The gaming industry and our company have seen considerable growth within the last several years, and even with near-term weaker economic conditions our resorts are still attracting premium customers and generating tremendous cash flow. We are focused on our fundamental strategies which have consistently produced positive results.”

95. 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. 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 significant debt capacity under our credit facilities . . . . This combination provides ample capital flexibility to meet all of our strategic growth initiatives and maintain our strategic focus during a difficult time in the credit markets .

96. These statements were knowingly false when made because Defendants knew MGM did not have sufficient “capital 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.

97. Following the issuance of the press release, Defendants conducted an earnings conference call with analysts and investors, where Baldwin again misrepresented that construction

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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 .”

98. Contrary to their representations to the market, Defendants knew the construction estimate for CityCenter of $8.1 billion to $8.4 billion still was falsely understated. Because the design drawings for CityCenter still were not completed, it was not possible for Defendants to formulate an accurate or reasonable 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. Therefore, according to

CW1, there was “no time to sit down and do really good math on the costs” beforehand.

99. 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. 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.

100. Defendants also knew the GMP contracts on CityCenter were “not really guaranteed” maximum price contracts that would control costs. Indeed, according to CW2, the GMP contracts - 39 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 41 of 92

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 change orders that it was continually increasing the cost of constructing CityCenter and therefore the GMP contracts would not cap construction costs. 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.

101. Further, D’Arrigo spoke positively about MGM’s efforts to finance CityCenter stating:

We are currently in the marketplace talking to our lead group of banks with regards to securing financing for CityCenter. We recently held a bank meeting in Dubai with our partners there, and these leading institutions, which was extremely well 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. The project is progressing quite well as Bobby pointed out , and given the sponsorship and the progress we are making on the construction front and on the residential sales program, 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 bank capacity , which affords us the ability to continue to significantly invest in our properties and plant the seeds for growth, while at the same time providing us with the ability to be more opportunistic in how we access capital in these more difficult times.

102. During the question-and-answer session on the May 6, 2008 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,

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a lot of our banks are welcoming the opportunity to develop a relationship with our partner Dubai

World.”

103. 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 want reinvest[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.

104. In contrast to Defendants statements in ¶¶101-103, supra, 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.

105. Defendants knew lenders were not eager or “positive” about lending funds to MGM

or CityCenter. Indeed, according to CW10, as of the first quarter of 2007 and 2008, CityCenter was

the number one risk to the Company, and CityCenter was problematic because it was an eight- to 10-

year project that was condensed into a five-year timeline. Because of this, everything on the project

had to happen perfectly or else the schedule would get thrown off and costs would increase

significantly.

106. 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 - 41 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 43 of 92

an additional 20 million shares of its common stock. MGM also announced that it had “repurchased

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.

Defendants Are Told About Serious Defects at CityCenter by Clark County Supervisors

107. Between July 2008 and September 2008, Clark County inspectors issued numerous

Notices of Violation to MGM – 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.”

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Moreover, violations at CityCenter persisted even after Clark County issued these notices, and, on

February 9, 2009, an inspector issued a Correction Notice indicating that a contractor was “working without Clark County approved plans,” reportedly referencing all building permits at the site.

108. 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.

109. 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 [CityCenter] financing which is an overhang for the MGM shares.”

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110. Moreover, based on those meetings and Defendants’ previous comments, Deutsche

Bank expressed its belief that MGM would easily secure the necessary CityCenter financing, stating

“our sense that 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 not close to covenant caps,

currently leveraged at a favorable 5.5x, peaking at 6.5x immediately before [CityCenter] opens

(Q409)-better if cash flow inflects positively, then moderating along with cash flow generation at the property.” 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.

111. 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.”

112. Unbeknownst to investors, but known to Defendants, during this period: (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 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. - 44 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 46 of 92

August 5, 2008

113. 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. On August 11, 2008, the Company

filed its Form 10-Q for the second quarter of 2008, which largely repeated the results and statements

announced on August 5, 2008 as set forth below.

114. 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 .’”

115. 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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116. 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 CityCenter lately, you can see that most of the buildings are approaching full height. In fact, all of the buildings will be full height by the end of February of next year.

117. 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 .”

118. 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 $200 million, and also that number is the full GNP [sic, should be GMP] number which still contains some contingencies and some potential cost savings. . . . And the number we gave you last quarter [$8.1-$8.4 billion] is unchanged in terms of guidance . . . .

119. 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:

From an MGM Mirage perspective, we have ample capacity to fund our share of these costs through our available credit lines and available free cash flow from our operations and as most of you know, our credit facility can actually be expanded from $7 billion to $8 billion with additional commitments from lenders as well. So we’re well in good shape there to fund these costs .

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120. 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:

[Jim Murren:] It’s been a remarkable commentary around CityCenter financing. We’ve done dozens of bank financings over the past decade and there’s an incredible amount of interest in this particular one , and it’s taken a little bit longer than we would have liked because we’ve been having healthy discussions on rate and also on structure. But we’re over halfway there, we’re going to get it done this quarter , we wanted it done last quarter, but we’re going to get it done this quarter and in the meantime we’re funding CityCenter with our partners and we have a tremendous amount of optionality with this in terms of other joint venture financings and other bank financings. We think it’s been completely overdone in terms of the interest on this, but nonetheless, it’s[] topical .

121. 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 .”

122. In turn, Lanni falsely 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 had been 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 not going to do anything over the next several years. And that, we think, is a profound positive for our competitors that are here today and ourselves.

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123. Defendants’ statements on August 5, 2008 concerning (i) MGM’s financial results;

(ii) the Company’s exposure to deteriorating credit markets and economic conditions; (iii)

CityCenter’s construction progress, schedule, budget and costs; and (iv) MGM’s access to capital

(referenced above in ¶¶113-122) were knowingly false and misleading when made. These

statements were false and misleading 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 CW1, since

CityCenter was a “fast-track” project, it was being designed (and re-designed) in almost real-time as

it was being constructed. Therefore, a reasonable estimate could not be formulated because,

according to CW1, 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 - 48 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 50 of 92

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

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 - 49 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 51 of 92

supports to be added and re-installment of the floor) and the concrete pour at the was

“screwed up.” And, according to CW1, 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.

124. Finally, despite knowing that MGM’s statements in its second quarter 2008 Form 10-

Q regarding CityCenter’s construction costs were grossly understated, 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

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misleading” and “fairly present in all material respects the financial condition, results of operations and cash flows of [MGM].”

(a) The SOX certifications were false and misleading because 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) internal controls over financial reporting were inadequate.

October 6, 2008

125. On October 6, 2008, D’Arrigo reassured the market about MGM’s financial condition, falsely characterizing CityCenter as a strong well-conceived project when he knew that

MGM had taken on CityCenter under the worst possible macroeconomic conditions:

Even in the current difficult lending environment, strong well-conceived projects attract financing – CityCenter is such a project . We appreciate the strong support CityCenter has received from these participating financial institutions . . . We and our partner are actively in discussions with additional financial institutions to obtain the additional funding of the credit facility and are receiving strong interest in the syndication process set to launch this week. * * *

MGM’s strong balance sheet and long track record of superior financial performance combined with the substantial financial resources of our partner uniquely position CityCenter in an obviously difficult credit market .

126. As CityCenter’s costs continued to rise and Defendants rummaged for financing, the real estate and credit markets had collapsed, Lehman had filed for bankruptcy just weeks earlier,

IndyMac was seized, and the Federal Reserve injected hundreds of billions of dollars to avoid further failures.

127. The same day, MGM issued a separate press release announcing an amendment to its senior bank credit facility. Commenting on the amendment, D’Arrigo reiterated his previous false and misleading remarks regarding the Company’s financial condition: - 51 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 53 of 92

We are pleased by the overwhelming support our financial partners have shown in our Company . . . MGM enjoys one of the strongest balance sheets in our industry and although we have remained comfortably within all of our financial requirements , we believe it is a prudent course of action to maintain greater financial flexibility in these uncertain credit markets.

128. 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.”

129. MGM’s and D’Arrigo’s statements on October 6, 2008 concerning CityCenter

financing, MGM’s exposure to the deteriorating credit market and access to capital and the

Company’s financial position and prospects (referenced above in ¶¶125-127) were knowingly false

and misleading when made because they failed to disclose and/or misrepresented the following

adverse facts, among others: 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, was not

“comfortably within all of [its] financial requirements, was not “on solid footing,” 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. - 52 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 54 of 92

October 29, 2008

130. 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. Lanni’s statement that “we continue to generate strong cash flows”

was false because MGM was struggling from a cash position in October 2008, according to CW5

and CW9.

131. 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.”

132. These statements were false and misleading because 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 - 53 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 55 of 92

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 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.

133. 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 . . . .”

134. Defendants, however, 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 CW1, - 54 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 56 of 92

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. In

addition, 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.

135. On the same call, 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, and managing our property capital, we believe our actions have solidified our near-term liquidity and we intend to further access the capital markets to manage our long- term financial position .

Defendant D’Arrigo’s statement that Defendants had “solidified [MGM’s] near-term liquidity” was

false because MGM was struggling from a cash position in October 2008, according to CW5 and

CW9.

136. 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 announcement you guys made this morning, if you can raise the capital – or I guess the red, it’s not quite 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 way you look at things today?

[Jim Murren:] As you know, Dan said it. We can’t comment under SEC rules about anything that I think you’re referring to. But we have access, and always have, to capital markets of every type . And we are very confident that we have the

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ability to manage this business and manage our balance sheet through the economic storm that we’re in.

137. 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 parent level has many options to raise capital , which gets to the third issue that you mentioned, the liquidity issue. This company will not allow itself to be in any type of financial jeopardy because we have too many options available to us in too many areas 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 we have the tools available to us to improve our liquidity in this very difficult time .

138. These statements were false because 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. In addition, 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. Defendants also 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.

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139. In addition, 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.

Defendants Begin to Disclose Massive Problems at CityCenter

140. 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 other additional cost savings the company now anticipates total cost savings of approximately $600 million up from its previously stated $400 million. In addition, - 57 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 59 of 92

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.

141. 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 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.

142. 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.”

143. 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.

144. 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,

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“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.4

145. After digesting this adverse news, on February 3, 2009, Moody’s downgraded

MGM’s credit rating to B1 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.”

146. 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 B1 rating . . . .”

147. 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.”

4 On January 15, 2009, the Las Vegas Sun published another article concerning the CityCenter construction, adding that the engineer of record on the project had discovered in July 2008 that contractors had wrongly installed structural rebar on floors 6 through 15 of the Harmon.

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148. 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.

149. 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, 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.”

150. 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.

151. On March 3, 2009, MGM filed a Form 12b-25 with the SEC, 5 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

5 A Form 12-b-25 is filed when a company is unable to comply with filing deadlines for quarterly and annual reports. A proper Form 12b-25 extends the company’s deadline for filing such forms.

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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.

152. 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.”

153. 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 - 61 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 63 of 92

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.

154. 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

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.

155. 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 Change 2/27/09 $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%

156. Similarly, the MGM Notes purchased by Plaintiff PMT tumbled in price during this

same period.

157. 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%:

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Decline as the Truth was Disclosed MGM 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% 6.875% MGM Note, due 4/1/16 -30% 7.5% MGM Note, due 6/1/16 -43% 7.625% MGM Note, due 1/15/17 -42% 8.375% MGM Note, due 02/01/11 -81% 8.5% MGM Note, due 09/15/10 -42%

POST-CLASS PERIOD EVENTS

158. 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.

159. 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

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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 . The uncertainties described above regarding 1) our ability to meet our financial commitments, and 2) our potential noncompliance with financial covenants under our senior credit facility, raise a substantial doubt about our ability to continue as a going concern. . . . As a result, the report of our independent registered public accounting firm on our consolidated financial statements for the year ended December 31, 2008 contains an explanatory paragraph with respect to our ability to continue as a going concern.

Emphasis in original.

160. 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 Company Accounting Oversight Board (United States), the consolidated financial statements and 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 financial statements and financial statement schedule and included . . . an explanatory paragraph expressing substantial doubt about the Company’s ability to continue as a going concern.

161. 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.”

162. 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

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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 the CityCenter project, MGM has continued to push forward excessively spending without regard to appropriate accountability . The increases described above are substantially higher than MGM originally presented to Infinity, even though the project has been materially scaled back from what was originally presented to Infinity. These cost overruns, many of which were not shared with Plaintiff prior to their incurrence, demonstrate MGM’s lack of candor in the management of the development of the CityCenter project .

163. 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).”6

164. Perini also sued MGM. In Perini’s lawsuit against MGM, it sought $492 million for unpaid construction work on CityCenter (the “Perini Complaint”). 7 The Perini Complaint alleged costs grew as MGM demanded “numerous design changes and substantial Project modifications.”

6 The Dubai World Complaint was dismissed a month later after MGM and Dubai World reached an agreement with lenders to fund CityCenter.

7 Perini Building Co., Inc. v. MGM Mirage Design Group, et al ., Case No. A-10-612676-B (in the Eighth Judicial District Court of the State of Nevada in and For the County of Clark).

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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.

165. 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 building geometry, and 3) with finishes commensurate with or below the finishes in the

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.”

166. 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 DATE Aria Tower 04/09/2007 10/08/2007 182 Aria Podium 04/12/2007 11/28/2007 230 Convention Center 08/01/2007 02/19/2008 202 Showroom 04/27/2007 11/13/2007 200 - 66 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 68 of 92

Sinatra Garage 07/10/2006 08/01/2007 387 06/12/2007 10/22/2007 132 Central Plant 02/28/2006 08/02/2007 520 Mandarin 01/24/2007 09/27/2007 246 Garage 5 06/13/2006 09/13/2007 457 Harmon 03/13/2007 01/26/2008 322 Crystals 01/15/2007 10/22/2007 280 Veer 06/01/2007 11/05/2007 157

167. 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.

168. 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 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.

169. 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

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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.”

170. 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.

171. 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 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

172. 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.

173. 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 - 68 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 70 of 92

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.

174. 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.

175. 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

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.

176. 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, - 69 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 71 of 92

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.

177. 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

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.

178. 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

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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.

179. 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 B1, 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 . . . .”

180. 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.

181. 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.

182. 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 - 71 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 73 of 92

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 ¶¶94, 114 and 122.

183. 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 B1 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 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.

184. 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 - 72 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 74 of 92

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 .

185. 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,

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.

186. 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 - 73 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 75 of 92

.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.

187. 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

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.”

188. 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 . . . .”

189. 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 - 74 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 76 of 92

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.

190. Similarly, MGM’s Notes declined precipitously during February and March 2009 as

the inflation in the Notes was removed as Defendants’ fraud became apparent and MGM’s credit

rating was downgraded. See ¶¶179-188, supra.

191. 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

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.

192. 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 - 75 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 77 of 92

size and Defendants’ constant discussion of the project, Defendants were well aware of all the facts

concerning CityCenter alleged herein.

193. In addition to the Insider Defendants’ knowledge of the Company’s false and

misleading statements based on 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 8 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, 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.

194. 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.

8 Defendant Lanni certified each of MGM’s Forms 10-Q and Forms 10-K throughout the Class Period. Defendant D’Arrigo certified each Form 10-Q and Form 10-K with the exception of MGM’s 2Q07 Form 10-Q, which was certified by Defendant Murren.

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195. 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.

196. 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. 9

According to SEC rules, such disclosures are necessary to prevent MGM’s financial statements from being misleading. 10

197. 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. 11 If a material

deficiency is identified, indicate the course of action that [MGM] has taken or proposes to take to

9 “The term ‘financial statements’ as used in this regulation shall be deemed to include all notes to the statements and all related schedules.” SEC Regulation S-X, Article 1, Rule 1-01(b), Application of Regulation S-X .

10 See, e.g. , SEC Regulation S-K, Item 303 and Accounting Principles Bulletin.

11 Item 303 defines liquidity as follows: “The term ‘liquidity’ as used in this Item refers to the ability of an enterprise to generate adequate amounts of cash to meet the enterprise’s needs for cash.”

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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

change in the relationship between costs and revenues . . . the change in the relationship shall be

disclosed.”

198. 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

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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

199. 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.

200. 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.

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.

201. 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.

202. 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.

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203. 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.

204. 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.

APPLICABILITY OF PRESUMPTION OF RELIANCE: FRAUD ON THE MARKET DOCTRINE

205. 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;

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(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

(a) 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.

206. 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 PROTECTIONS OF THE PSLRA’S SAFE HARBOR PROVISION

207. 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,

Defendants had actual, contemporaneous and/or historical knowledge of the facts and conditions belying their false and misleading statements.

208. 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

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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 Act and Rule 10b-5 Against MGM and the Insider Defendants

209. Lead Plaintiffs incorporate ¶¶1-208 by reference.

210. 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.

211. MGM and the Insider Defendants violated §10(b) of the Exchange Act and Rule 10b-

5 in that they:

(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

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(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.

212. 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.

213. 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 Act Against the Insider Defendants

214. Lead Plaintiffs incorporate ¶¶1-213 by reference.

215. 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

control, directly or indirectly, the decision-making of the Company, including the content and

dissemination of the materially false and misleading statements alleged herein.

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216. 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.

JURY TRIAL DEMANDED

Plaintiffs hereby demand a trial by jury on all claims and issues so triable.

Dated: April 17, 2012 Respectfully submitted,

KESSLER TOPAZ MELTZER & CHECK LLP

s/ Ramzi Abadou Ramzi Abadou Eli R. Greenstein Stacey M. Kaplan Erik D. Peterson 580 California Street, Suite 1750 - 84 - 699690_1 Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 86 of 92

San Francisco, CA 94104 Tel: 415/400-3000 Fax: 415/400-3001

-and-

Christopher L. Nelson (Pro Hac Vice) 280 King of Prussia Road Radnor, PA 19087 Telephone: 610/667-7706 Facsimile: 610/667-7056

NIX PATTERSON & ROACH, LLP

s/ Bradley E. Beckworth Bradley E. Beckworth Jeffrey J. Angelovich Susan Whatley Brad E. Seidel Lisa P. Baldwin 205 Linda Drive Daingerfield, TX 75638 Tel.: 903/645-7333 Fax: 903/645-4415

ROBBINS GELLER RUDMAN & DOWD LLP

s/ Brian O. O’Mara Arthur C. Leahy Brian O. O’Mara Ryan A. Llorens

655 West Broadway, Suite 1900 San Diego, CA 92101 Tel: 619/231-1058 Fax: 619/231-7423

Lead Counsel for Plaintiffs

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GOODMAN LAW GROUP Ross C. Goodman (SBN 7722) 520 South Fourth Street, 2nd Floor Las Vegas, NV 89101 Tel.: 702/383-5088 Fax: 702/385-5088

LAW OFFICES OF CURTIS B. COULTER, P.C. Curtis B. Coulter (SBN 3034) 403 Hill Street Reno, NV 89501 Tel.: 775/324-3380 Fax: 775/324-3381

Liaison Counsel for Plaintiffs

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CERTIFICATE OF SERVICE

I hereby certify that on April 17, 2012, 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 April 17, 2012.

s/ BRIAN O. O’MARA BRIAN O. O’MARA

ROBBINS GELLER RUDMAN & DOWD LLP 655 West Broadway, Suite 1900 San Diego, CA 92101-3301 Telephone: 619/231-1058 619/231-7423 (fax)

E-mail: [email protected]

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Mailing Information for a Case 2:09-cv-01558-GMN -VCF

Electronic Mail Notice List

The following are those who are currently on the list to receive e-mail notices for this case.

• Ramzi Abadou [email protected],[email protected],[email protected],[email protected]

• Jeffrey Simon Abraham [email protected]

• Jeffrey J Angelovich [email protected]

• Lisa Baldwin [email protected]

• Ze'eva K Banks [email protected] ,[email protected]

• Bradley E Beckworth [email protected] ,[email protected],[email protected]

• Todd L. Bice [email protected],[email protected]

• Brad D. Brian [email protected]

• Curtis B. Coulter [email protected],[email protected]

• Charles C. Diaz [email protected]

• Lee A. Drizin [email protected],[email protected]

• Jack G Fruchter [email protected]

• George M Garvey [email protected]

• Ross C Goodman [email protected] ,[email protected] ,[email protected]

• Griffith H Hayes

https://ecf.nvd.uscourts.gov/cgi-bin/MailList.pl?553171903032855-L_555_0-1 4/17/2012 CM/ECF - nvd - District Version 4.2- Page 2 of 4

Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 90 of 92

[email protected] ,[email protected]

• Stacey M. Kaplan [email protected] ,[email protected]

• Matt Keil [email protected]

• Robert W. Killorin [email protected]

• Arthur C. Leahy [email protected],[email protected]

• Akke Levin [email protected],[email protected]

• Ryan A. Llorens [email protected]

• Jordan L. Lurie [email protected]

• Benjamin J Maro [email protected] ,[email protected] ,[email protected]

• Steve L. Morris [email protected],[email protected]

• Christopher Nelson [email protected]

• Kayvan B. Noroozi [email protected]

• Brian O. O'Mara [email protected] ,[email protected],[email protected]

• Erik Peterson [email protected]

• Gregory D. Phillips [email protected]

• Jarrod L. Rickard [email protected],[email protected],[email protected]

• Darren J. Robbins [email protected]

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Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 91 of 92

• David Rosenfeld [email protected]

• Samuel H. Rudman [email protected],[email protected]

• Joseph Russello [email protected]

• M Nelson Segel [email protected] ,[email protected],[email protected]

• Brad E Seidel [email protected] ,[email protected]

• David Siegel [email protected]

• Glenn K Vanzura [email protected]

• Susan Whatley [email protected],[email protected]

• James M Wilson [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 therefore require manual noticing). You may wish to use your mouse to select and copy this list into your word processing program in order to create notices or labels for these recipients.

Richard B. Brualdi Brualdi Law Firm, PC 29 Broadway 24th Floor New York, NY 10006

Darren J. Check 280 King of Prussia Road Radnor, PA 19087

John W. Goodson Keil & Goodson, PA 611 Pecan Street Texarkana, AR 71854

Sean M. Handler 280 King of Prussia Road Radnor, PA 19087

Sue Lee

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Case 2:09-cv-01558-GMN -VCF Document 152 Filed 04/17/12 Page 92 of 92

Brualdi Law Firm, PC 29 Broadway 24th Floor New York, NY 10006

Andrew R. Muehlbauer Cooksey, Toolen, Gage, Duffy & Woog 535 Anton Blvd 10th Floor Costa Mesa, CA 92626

Leigh A. Parker Weiss & Lurie 10940 Wilshire Blvd. 23rd Floor Los Angeles, CA 90024

Charles Piven Brower Piven 1925 Old Valley Rd. Stevenson, MD 21153

Yelena Trepetin Brower Piven 1925 Old Valley Rd. Stevenson, MD 21153

https://ecf.nvd.uscourts.gov/cgi-bin/MailList.pl?553171903032855-L_555_0-1 4/17/2012