Take-Two confirms formal SEC investigation

New management inherits continuing stock option scandal as old CEO leaves with more than $2.4 million in severance pay.

Take-Two Interactive shareholders cleaned house last week by voting out the publisher's entire board of directors and replacing it with a new crew headed up by former BMG Entertainment CEO Strauss Zelnick. While the people who helmed the company through the tumultuous years of the Hot Coffee and stock option scandals may be gone, their legacy continues to impact the company.

Last July, Take-Two Interactive revealed that it was cooperating with an "informal non-public investigation" by the Securities and Exchange Commission (SEC) in regards to stock option grants the company made dating back to the beginning of 1997. Yesterday the company revealed in an SEC filing that it had received a Formal Order of Private Investigation from the commission. As a result, the SEC can now subpoena witnesses related to the case.

Earlier this year, the publisher confirmed that there was "significant" mishandling of its stock options for years and pointed the finger at former CEO and founder Ryan Brant. Brant was later fined $6.3 million by the SEC and paid another $1 million to New York state and local authorities as part of a deal that included pleading guilty to first-degree felony charges of falsifying business records.

The SEC filing also includes details about the severance plan of former Take-Two CEO Paul Eibeler, whose employment with the company was officially terminated yesterday. While Eibeler will receive nearly $2.48 million in severance pay, he will also serve in an advisory role for the next six months. For his input, Eibeler will be given a total of $300,000, health care benefits, and a monthly car allowance of $799.

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37 comments
Hedfix
Hedfix

Yeah simulated sex, in clothes, in an 18-rated game. SHOCKING!!!!1111

rokkuman09
rokkuman09

I just can't believe they are still dealing this with this. But it is there fault, they should have just said what was in the game, so they didn't have to deal with the consequences of lieing about it later..

Hedfix
Hedfix

"gibsongirl Jah_Glow "Grand Theft CEO" that's awesome." Check the very first post. :P

cjcr_alexandru
cjcr_alexandru

Can't we forget about the scandals for a while? GTA IV is coming...

_UweBoll
_UweBoll

Is Mulally so smooth or is the board at Ford so stupid? Probably the latter. Now I know why Ford is in such bad financial straits these days. :roll:

theKSMM
theKSMM

$2.4M? Bah...that's chump change for a CEO. Ford Motor Company President and CEO Alan Mulally got $39.1M from Ford in 2006. He joined the company in September. Yep, he averaged $10M per month for the last four months of the year. Mulally is so smooth he got Ford to pay him the money he would have earned had he stayed on a Boeing. Not a bad way to make a living.

subrosian
subrosian

Sony and Microsoft will avoid buying this company - no matter what the fanboys say, neither of them is willing to take on the bad publicity and legal difficulties that have come about by Take Two's money management woes. On top of that, do you really think Microsoft or Sony want to be directly associated with Grand Theft Auto? As in, taking legal responsibility for things like the Hot Coffee mod? It's rather convenient to let someone else get their hands dirty for the game that sells your system.

zsc4
zsc4

Theres a lot of speculation around Take-Two...I really don't know what to say.

gibsongirl
gibsongirl

Jah_Glow "Grand Theft CEO" that's awesome.

ChaosIncarnate
ChaosIncarnate

Yeah, the people working in the company are just creating one scandal after another. It's the shareholders who are forcing change, because a company in lawsuit year round isn't very good for shareholder value.

Digitised
Digitised

zeke take2 isnt trying to make anything right, the investors had the board replaced. This will however hopefully get it into the hands of legitimate businessmen.

Zeke129
Zeke129

It's obvious that Take-Two is trying to make this right. It's not every day that a major company replaces their entire board.

BranKetra
BranKetra moderator

Way to go Take-Two's old board of directs for teaching the world how to not do business illegally.

Bgrngod
Bgrngod

A monthly "Car allowance" WTF?

spow
spow

thats why GTA is so good ... dogs cant tell stories about wolfes... :)

soniqstylz
soniqstylz

mrjasler: weren't the programmers getting 100k per year the ones who included the Hot Coffee "mod" that started the ball rolling on the bad news for Take Two? Anyway, that's how it is in every large corporation: look at Home Depot, where the former CEO got 20 million to leave, after running the company into the crapper.

astrozen
astrozen

Seriously, this stuff is nothing when compared to the sh*t that the CEOs of major energy, defense and communication companies get away with! At least the heads of the company are staying true to the brand image, right? Mad thievin' yo!

Jah_Glow
Jah_Glow

Bahahaha... Grand Theft CEO. Grand Theft Stock Options! Grand Theft Decency... and last, but not the least, Grand Theft Humor!

Generic_Dude
Generic_Dude

Must be nice to be able to get away with being a dirty, rotten effing thief.

redskinStu
redskinStu

Hedfix got it right... mrjlaser got it right too.

mrjasler
mrjasler

CEO's at any company get amazing benefits like this guy.. it's a shame that the people who actually make the games and are responsible for getting the game to the shelf are not the ones who are compensated money wise. CEO's can screw up and make bad decisions and still walk away with 2.5 million in severence package.. that doesn't seem fair does it? If you only knew the difference between someone who works on a game like gears of war getting 100k a year .. a royalty package of say 50k for the game doing well and then compare it to the people who really benefited from gears of war who had nothing to do with making it who get major bonuses ..it would make you sick.....

wild_world_girl
wild_world_girl

Car allowance? Can't these guys wipe their own a**es with their 7-figure salaries?

Yuck_Too
Yuck_Too

Mmmm...I love business, stock and the average public

Zoomer30
Zoomer30

They should hire Jack as their lawyer, Im sure he would do a good job ;)

Hedfix
Hedfix

Grand Theft CEO!