SEC sticks up Grand Theft Auto maker for $3m

Settles backdating lawsuit

By Austin Modine, 1st April 2009

Steps to Take Before Choosing a Business Continuity Partner

Take-Two Interactive, publisher of the Grand Theft Auto video game series, has agreed to pay US regulators $3m to settle a lawsuit over illegally backdating employee stock options.

The maker of the popular series was among more than 200 companies involved in a tech industry wide backdating probe by the US Securities and Exchange Commission that saw Dell, Apple, McAfee and Brocade investigated.

SEC claimed Take-Two defrauded investors by altering the dates of when stock options were granted for officers, directors, and key employees to when the price closed at historic lows. The practice isn't illegal in itself - unless a company fails to report it to regulators and investors.

The SEC claimed 100 occasions between the years 1997 and 2003 under the direction of Take-Two's former chief executive Ryan Brant. The ex-chief was previously charged for his alleged role in the scheme. He agreed to pay more than $6.3m and to never serve as an officer or director to a public company.

Without admitting or denying the SEC's allegations, Take-Two agreed to pay a civil penalty of $3m and an additional $300,00 to the New-York state District Attorney for cost of investigation and lawyer fees.

As part of the settlement, however, the company acknowledged that: "Certain of its former directors and officers engaged in certain illegal behaviors related to the historical granting of stock options." In return, the New York DA won't pursue charges for those "certain" activities.

"Resolving this issue has been a key objective for Take-Two since the current management team took office in early 2007, and we are gratified to have put this matter behind us," Take-Two's chairman Strauss Zelnick said in a statement. ®

Requirements Checklist for Choosing a Cloud Backup and Recovery Service Provider