Sign on Options
Theme:
To Dark

More lawsuits for Take-Two

Publisher's shareholders begin filing class action complaints against company; insider trading and shady financial practices trumping Hot Coffee?

When Take-Two Interactive filed its annual report with the Securities and Exchange Commission Tuesday, it warned that more lawsuits could be on the way. Sure enough, the last few days have seen a pair of class action lawsuits against the company come to light.

Take-Two's filing specifically mentioned four suits it was facing in New York, Illinois, and Pennsylvania, stating that it had been notified of another New York suit that had not yet been served. That suit, a class action brought against the company on behalf of St. Clair Shores General Employees Retirement System and other Take-Two shareholders, has now surfaced in the United States District Court for the Southern District of New York system. And it turns out that the Hot Coffee scandal is apparently just a small part of the issue.

The suit alleges that Take-Two executives engaged in insider trading, with executives selling off more than $11.8 million shares in the middle of an SEC investigation into its accounting practices. The suit also says the company's financial reporting was fundamentally flawed, that it choked retail channels with unwanted product to boost sales figures (a charge reminiscent of the Majesco shareholder class action suit), that its recent spree of developer acquisitions (Firaxis, Irrational Games, Gaia, Visual Concepts) allowed it to better hide losses in its financial reporting, that it failed to report the departure of the chairman of its board of directors, and other potentially illegal financial practices.

Meanwhile, Game Politics is reporting on another class action lawsuit in the same District Court being brought against the company by its shareholders. The site is hosting the full text of the suit, which levels many of the same allegations against Take-Two. It cites numerous instances in which the plaintiff believes the company made false and misleading statements to keep the stock price high until executives could dump millions of dollars of overvalued shares into the market.

Adding to the company's woes, research firm Piper Jaffray yesterday downgraded the stock from Outperform to Market Perform. Curiously enough, Take-Two stock finished the day's trading up 8 percent to $16.29, its best finish since January 26, several days before its belated annual filing.

66 Comments

  • sugreev2001

    Posted Feb 23, 2006 6:15 am GMT

    why can't they just leave them alone.They should operate from another country,so that they can avoid these lawsuits.

  • regulesblade

    Posted Feb 4, 2006 3:22 pm GMT

    I hate all of these lawsuits

  • 35mmfilm

    Posted Feb 4, 2006 12:23 pm GMT

    LoL Take Two wouldnt be getting so much shrapnel if they had been a little smarter and stopped at GTA:Vice City instead of making a whole line of crap.

  • scheibe

    Posted Feb 4, 2006 8:18 am GMT

    Is Take-Two screwed?Is this the end?Please answer this question,because I want to know if it is possible that there won't be another GTA.

  • dru26

    Posted Feb 3, 2006 10:57 pm GMT

    Hillary Clinton and Chucky Schmucky Schumer are the two morons who spearheaded the war against violent video games. I have yet to see a Republican even speak on the issue.

  • Super_C

    Posted Feb 3, 2006 3:44 pm GMT

    I'm posting this message because there appears to be a bug in the message board software where, if there is only one message on a page (and that page number is greater than page 1), a link to the last page will not appear (making the most recent message is hidden) until an additional message is posted.

  • Super_C

    Posted Feb 3, 2006 3:38 pm GMT

    "...the blame falls square to the PRESIDENT OF THE USA,because he needs more money from somewhere to fund his littel WAR..."

    That makes absolutely no sense. Assets would be liquidated and distributed to the creditors and/or shareholders (depending on the amount/type of outstanding debt). How on earth can you possibly think the president of the United States is involved with a lawsuit against Take-Two?

    As Mark Twain said: "It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt."

  • EvIlKiNgKoOpA

    Posted Feb 3, 2006 3:03 pm GMT

    Well guys,what canwe say,i loved GTA 3 and GTA VC,what i didnt like was
    GTA SA,the story suck to me,didnt feel original to me at all,seems like
    they got something out of the 10 o'clock news,and man i hated ROCKSTAR
    because of that,they really let me down,so i have no pitty or worry about
    them,anymore,FYI,if the feds are the ones taking T2 down,then all
    finacial assests are frozen,meaning everything take 2 owns
    cant sell or make any profit,also no games can be produce
    or sold,also sense the feds are the one doing this,they CAN'T
    allow T2 to sale any of there companys,meaning if T2 goes down
    so will ROCKSTAR, 2KSPORTS,and any other sub company
    they might own,this isnt about the hot coffee,its about taking there
    money and making them spend jail time,sure we can blame the
    press for making this into a big deal,but the blame falls square to
    the PRESIDENT OF THE USA,because he needs more money from
    somewhere to fund his littel WAR,so my friends,if you want to
    hurt the polictical bastards,i suggest VOTING!!! against them

  • Super_C

    Posted Feb 3, 2006 2:09 pm GMT

    Guys - this has very little to do with a video game sex scene. The only thing it has to do with video games at all is that the company happens to make them. This is really serious stuff; and a lawsuit is very justified if this is true. If true, these guys stole millions of dollars from regular people; defending them may not be the right idea...

  • aaron6581230

    Posted Feb 3, 2006 1:42 pm GMT

    i seriously hate these lawsuits for game companies. They try to "protect" the children but set a bad example for THE children. What would children think about this? Won't people do this again and cause even more conflict in the world?

  • wackoss

    Posted Feb 3, 2006 12:46 pm GMT

    Isn't it fitting - they produce games where the main characters don't have morals and now we find out that the executives are charged with insider trading.

    Proof that video games are corrupting people! (I'm only kidding)

  • Gamemaster1588

    Posted Feb 3, 2006 12:21 pm GMT

    WOW....Take Two being sued...I am so surprised

  • quietguy

    Posted Feb 3, 2006 12:13 pm GMT

    Well, if there's is one thing that we can all agree on is that TakeTwo will definitely hit the wall. Expect some more corporate shakeups in the future and... possible bankrupcy.

  • drkblaydz_1

    Posted Feb 3, 2006 11:40 am GMT

    I don't know what's worse: The money TTWO stole from it's shareholders, or the money the government is going to steal from me to investigate this (which obviously will lead to a slap on the wrist at worst).

  • BigV25

    Posted Feb 3, 2006 10:33 am GMT

    When will people realize that the people that should be playing this game are mature enough to know that this stuff isn't real.

    Besides this mod was for the PC version of the game. How many little kids have good enough PCs to play GTA.

  • tbonetrav18

    Posted Feb 3, 2006 10:08 am GMT

    that sucks, oh well at least nobodys going to go to jail for the insider tading, yet.

  • pearcer

    Posted Feb 3, 2006 9:53 am GMT

    Rats and sinking ship lol

  • Raposo_29

    Posted Feb 3, 2006 9:11 am GMT

    Stupid USA. Stop that...its just a game. No one kills because of a game. Only a retard and he kills because anything, not because of the game. Its a way to try to earn some money without work...and that sucks

  • ghsacidman

    Posted Feb 3, 2006 9:09 am GMT

    If Take Two doesn't survive this I'm going to be very angry.

  • rodrigo_br

    Posted Feb 3, 2006 8:53 am GMT

    Now thatz wrong...
    Burnin books and material that politicians say it's wrong is just givin politicians more power to do what they feel to with the population xP
    besides, kids will grow up and have sex some day, so, what's wrong with the sex mini-game???
    well, the society doesn't see it this way, so forget about the mini game and go on...
    the real problem is that TTWO execs decided to be illegal as CJ and made all that sh¨% with the actions, trading and stuff...
    So, TTWO is going down with whonever left a lot of money invested there, no matter what happens to these lawsuits, lost money won't come back from nowhere...
    So, Rockstar will be left hangin' without money for a new game til someone buy it...
    Unless a miracle happen, TTWO wins these lawsuits and gets a lot of investment, all of its subsidiaries will be there to be bought, and surely, TTWO will sell all the others before sellin Rockstar, maybe EA buy Rockstar, so, even if Midnight Club sells better then NFS they will still get money...
    hehe
    But they will have the crazy idea of releasing it to all consoles and the PC, what will make some games like GTA to be a bad game just to be played on any console, thatz the problem with EA...
    SOOO, if someone is goin' to buy it, i hope it's SONY, so for us, final consumers, the GTA games will be the same as if rockstar were with ttwo..
    or who knows, maybe better...
    just imagine sony relesin GTA, and Midnight Club, the TWO best sellers from rockstar...
    hehehe
    sh%$, i've already said too much...
    bye fellas...

  • frankeyser

    Posted Feb 3, 2006 8:36 am GMT

    naughty naughty... didnt they learn from the whole martha stewart and enron crap.

  • Thanos_of_MW

    Posted Feb 3, 2006 8:35 am GMT

    xray5656
    lets be cool and try to destroy the video game market, all this stuff is getting annoying... lawsuits, legislation, liberals... i'm seeing a trend here... ///// Interesting point of view. Are the filthy hands of the MPAA/RIAA behind all of it? People moving towards better forms of entertainment like games (which made more money than movies last year) are eroding their market, so they mobilize their politician puppets to try to end the game industry?

  • ntwining99

    Posted Feb 3, 2006 7:43 am GMT

    Paganstar thank you. While I agree with those who have supported my first amendment rights that defend our right to produce any kind of filth the almighty dollar supports they digress from the real point. Take Two are being sued because they have, according to Reuters, reported false earnings and possibly hid their financial woes in the cost of the few companies they have aquired over the last year. This effects those people and institutions who invested in the company as they are loosing alot of money at the moment since the stock price has been spiraling down.
    Furthermore, the hot coffee scandal is apparently about kids getting their hands on a game with illicit content. I thought kids arn't supposed to be able to get their hands on a mature games anyways. The question, i thought, was simply how old you have to be to view such content, not if you should be allowed to at all. Take Two doesn't deserve to go down because they publshed that content neither does Rockstar for making it. If so then perhaps those same people should tell universal to go to hell for making scareface, a movie that inspired some of the scenes from vice city. Oh, and while we are at it can we also get rid of Boyz in the Hood and Menace to Society. Also I would like to add that the Harry Potter books have witchcraft and thats bad for children. Come on lets open our arms to big brother. Lets burn books, edit movies, and ban loud music. Let the revolution begin my neutered brothers and sisters.

  • Paganstar

    Posted Feb 3, 2006 7:01 am GMT

    Many people seem to be missing the point. These lawsuits are about insider trading and falsly reporting their earnings.. This has nothing to do with sex and violence in video games.

    If they did what is claimed they will pay for it through money and possibly jail time. This would be true if this company sold nuts & bolts, Hamburgers, Computers or any other product in the world.

    Insider trading and false reporting of earnings screws over the investors in the company and only helps a few greedy people at the top.

    So if you want to whine about Hotcoffee on the other suits fine. I personally beleive that there is too much violence and sex in the games but it is the responsibility of parents like myself to decide what my kids can and cannot see or play, not the government. Unfortunantly many parents have no idea or just do not care so the govenment steps in (I mean they got that console for the kid so it could babysit them and they would not have to be bothered by them as much).

    However these two suits are not about violence, not about sex. This is about business. People invest in companies not because they like the products or for sentimental reasons. They invest in companies to make money plain and simple. They expect a return (profit) on that investment. If the company does not make a profit for the investors and are honest about it then the investors pull out and some money is lost by everyone. If they lie about it to save their own invested money and leave the other shareholders with an even bigger loss then that is illeagal and this is what the suits are about.

  • YukoAsho

    Posted Feb 3, 2006 6:57 am GMT

    I'd say the financial deception. The Hot Coffee losses could be counteracted by GTA6, but if people aren't investing in the company anymore, it'll be hard to get by without selling assets.

  • Nradd99

    Posted Feb 3, 2006 5:00 am GMT

    I'm honestly starting to doubt that Take-Two will survive all these lawsuits. Maybe if there was no more GTA gamers would finally start to wake up. The question is, what will ruin the company, the Hot Cofee contreversy, or the financial deception.

  • miiiguel

    Posted Feb 3, 2006 4:30 am GMT

    In this particulary case I've no sympathy for neither parts, but I was outraged by the views of 'sanojeisanna', how can a young man (a guess) have this kind of retrograde views ?, Don't you think western civilization are mature enough to distinguish virtual from real, and on the other hand stay away from a product you don't like ? I mean..., do you think you need your government to tell you what you can or can't play ? I've passed the "teen years" already (pitty, pitty...), and I want to be able to play mature games, and I want to have the rensponsability to tell my kids (no, not that phase yet, but, it'll come...) what they can and can't play. I want goverments to focus on their job, I take care of my family, thank you very much!
    sandz_09 - Kudos!

  • Falamin

    Posted Feb 3, 2006 4:29 am GMT

    we might finally get rid of take two. i can only hope. take two is a disrace to all video games.

  • VivaLaLazlow

    Posted Feb 3, 2006 4:25 am GMT

    R* makes millions, they have some of the best all time selling titles, with HQs around the globe. Even if Take 2 Died, or dropped them. Every other game devolper would be killing themselves to get Rockstar.

  • pyth0n13

    Posted Feb 3, 2006 1:51 am GMT

    i feel so bad for take two.

  • kainenable

    Posted Feb 3, 2006 1:41 am GMT

    Gaa, Take Two is the pimple of gaming companys. They make everyone else look bad. I can see now why TakeTwos CEO was named worst ceo of 2005.

  • PositiveFlow

    Posted Feb 3, 2006 12:11 am GMT

    Here's the problem with people like Sano: they think their OPINION is right, no matter what. So, if you believe Sano, if you had the chance to rob a liquor store and then shoot a cop and make a getaway in his patrol car, you would do it just because you can. Obviously, since you can do it in the game, its just the same if you did it in real life. Give me a damn break. Thats some twisted logic if i ever saw some. Just because you don't like a particular type of game, be it violent or sexual or whatever, doesn't mean you have the moral high ground over anyone else. Get off your high horse and join the rest of the sane world in reality.

  • blackjack4124

    Posted Feb 3, 2006 12:08 am GMT

    Yummy. Mass litigation, my future career - I wish...

    You do the crime, you do the time/pay the fine. Moral: Don't do the crime.

    (Note: If they haven't done the crime, then this sucks.)

  • xray5656

    Posted Feb 3, 2006 12:05 am GMT

    lets be cool and try to destroy the video game market, all this stuff is getting annoying... lawsuits, legislation, liberals... i'm seeing a trend here...

  • da_man244

    Posted Feb 3, 2006 12:01 am GMT

    If take-two loses all these lawsuits they will be forced to sell Rockstar. Some of you may be wondering why would they sell Rockstar? Well if they would lose some lawsuits I doubt the company will have a lot of money to pay so thats why they would need to sell Rockstar because they could get some good money selling them. To be honest i wouldn't care if take-two lose rockstar but then we all know that evil EA will try to get their hands on them.

  • pencilpusher

    Posted Feb 3, 2006 12:00 am GMT

    To clarify, they didn't just lie to Uncle Sam, but to INVESTORS. Those are the people who buy into the company, and do so based on good faith that the companies numbers are legit, and not junk.

  • sharpshooter188

    Posted Feb 2, 2006 10:49 pm GMT

    if i was the judge id tell these people to get over themselves.
    its always coming down to the
    YOUR SELLING SEX TO KIDS BLA BLA BLA.
    well thats alot of the base.

  • sandz_09

    Posted Feb 2, 2006 10:31 pm GMT

    and u can bring it on sano. i know cops, marines, and even people that are over 30 that get a kick out of gta because its a game. they know its a game and can have fun. just like with movies and music, u always get the one little insane kid who gets influenced and acts crazy. just because that ONE or even TEN instances happened, why arent the rest of the people who bought the game are equally crazy. why arent there mass cop killings and a massive crime rate. u know why? because the rest of the population isnt that stupid and arent influenced by a video game. why dont you take a stroll into areas that these "twisted" people come from. why dont you take a look at the real ghettos and slums and lower class. its a daily thing for alot of people and hey, maybe we are all twisted. but as long as we outnumber you and REALISTIC people know its a game, you can whine all you want. like i said, as long as people like me are hired in the industry, then you'll never see the end of games we LIKE. the gamers that like madden, gta and racing far outnumber you who think these games should be rid of. the casual gamers will exist as video games become more popular in the entertainment industry. as long as cities like mine completely buy all these games on such a large scale, devs like me will keep making what we like. rockstar f'ed up by putting in hot coffee. thats their stupid fault. because SENSITIVE ppl like you get offended. i swear, this country is getting worse. one boob appears on tv and theres an outcry. a cartoon makes political and sexual jokes and its bad. kids fail in school or sports and get A for effort even if theres no effort from themselves. its pathetic....

  • Myugenjin

    Posted Feb 2, 2006 10:23 pm GMT

    p.s. yeah what Sandz said!

  • Myugenjin

    Posted Feb 2, 2006 10:21 pm GMT

    If you read all of my last post then read this 2!.........Look at Target around last Holloween. They were bankrupt but because they owned the land their stores sit on they used it as collateral to get loans from Banks to invest into their competitor Walmart. When Walmart suddenly got 7-8 billions pumped into their stock many investors jumped in and by early dec. Target sold their stake in Walmart and got back 24-30 billion in revinues and was able to get out of Bankruptcy. So this covering up isn't illegal or even bad it's a smart business decision both for them and to appeal to us this exact example is why there have been so many Business Mergers in the News and on this site as of late. Since I invest for a living it easy to see why their stock would close 8% up because this is a smart & decisive decision, the business world isn't really war only more like Age of Empires or Chess!

  • sandz_09

    Posted Feb 2, 2006 10:17 pm GMT

    im sickened that pathetic people like sanojeisanna think gta is soooo bad. who gives a rats ass. its a game. dont like it, dont buy it. it seems a majority of people who buy it dont care about what u think either. i dont think pre teens should play it IMO. but 18+ and the majority that do play it, dont care about your stupid morals. you people think the world is gonna be pretty because we need stupid kiddy games like what nintendo offers. im glad to know that this country is rotting because of censorship and prissy people like you. and hate to break it to you, but the gta style will never die. just because you have this prissy lifestyle, doesnt mean the rest of the country wants to share it with you. by the way you talk about gta and sick and twisted people, i guess theres a whole lot more of them in this world considering its a best selling game and gets GREAT reviews. in fact, rockstar will never go down. take two, sure its been around with controversial games, but rockstar will choose to hire people who like games like gta. so think ur a saint and that life is colorful and that the gta genre will die. but i'll tell u this. as long as there are people like me in the industry and they keep hiring people like me, we'll be there to happily dissappoint you. its games like gta that have helped the industry regardless of controversy. not everyone loves madden, and not everyone loves gta. get used to it, its gonna be here longer than u and i are alive.

  • Myugenjin

    Posted Feb 2, 2006 10:10 pm GMT

    I think the insider trading with Martha Stewart was different because she lied about it in court in hopes to keep the stock up. In reality execs allways buy and sell their company's stock whenever they know their earnings reports are going to be good or bad. In the Case of that St. whatchacallit it sounds as though it's an Mutual fund/Financial institution who are pissed because they are loosing money as most class-action lawsuites are. This isn't the cigarette indus. so don't expect TTWO to fold and shellout millions of dollars because noone was killed nor laying in a hospital dibilitated. There's also many articles about comp merging to COVER UP financial losses like Sony and MS, ATI, and Nvidia! In the long run say 3-6 months from now whatever profits these comps make will only increase with the advent that their investments (buying other comps to cover up) will have risen giving them lots of money to develope new games.

  • SanojeiSanna

    Posted Feb 2, 2006 9:54 pm GMT

    Take Two is the "vocal" arm of Rockstar. As such, those who do the talking for a company also take their rap. Take Two and Rockstar are both as guilty. I hope that Rockstar goes down the tubes. I am sick of seeing GTA games and their twisted mentality-inspiring content always talked about. I played all GTAs and find it not any more enjoyable than any other game that didn't take much a brain to make or play. The reason people like GTA so much is because som people in this country have this facination with running down pedestrians, shooting cops, robbing people, slanging drugs and going on mass shooting rampages that they otherwise couldn't do in real life and get away with it (though if they could, these same twisted individuals would be the first ones commiting this).

    We can dance around the issue all day and say that videogames don't make people kill or whatever. And that is correct to a degree. The game is not responsible, as it is an inanimate object programmed to accept commands from it's human owner, but the human owners and their creators are. People say games like GTA don't make people kill but the truth is, they influence people who take too much to games like this. People like that are those who will do anything to defend the decadence and immorality that is GTA no matter how wrong the message is. Even if it was obviously being blantanly immoral and filthy or utterly evil in the gamers' face, that person will deny that they is anything wrong with it because it is 'only a game'. If it were only game and it cannot influence you, why then do you fight so hard to defend it? Obviously the critics are correct because anyone who dares utter a bad criticism towards GTA or the like are "Jack Thompsons" or political idiots who just want to spoil the "fun" for the average gamer. Sorry, I don't buy GTA-fanboys BS about GTA. It's a repugnant and vile game and so are others like it. I hope Rockstar goes down and takes GTA with it. Even better, if GTA were to switch hands when/if Rockstar/Take Two goes down, I hope GTA finds itself in otherwise incapable hands so those new Devs can totally destroy the allure and charm this utter filth has on people. Maybe GTA will then die the slow death it should have died long ago. Until then, wierd, sick idiots who have nothing but twisted and warped perceptions of 'fun' and 'just a game' attitudes towards GTA and it's clones will clamour more and more til it finally dies.

    Down with GTA, Roockstar and Take Two....should have stayed DMA design and made Uniracers game. You actually had more respect then. Now die a slow death GTA/Rockstar/Take Two!

  • Iriseon

    Posted Feb 2, 2006 9:34 pm GMT

    Class action lawsuit: When a law firm, or a coalition of firms, lobbies for, or is contacted by, maligned parties for the purpose of suing a company, therefore establishing financial penalties for wrongdoing. The lawyers are delighted to represent people on these types of suits, the bigger the better. One-third, or even 10%, of a large cash payout from a profitable company in an extremely successful growth market would be very lucrative, with potential for precedent furthering future indusrty-wide exploitation. Just look at how many companies have been bankrupted with asbestos lawsuits for mostly friviolous claims in terms of direct responsibility. While this case may have some merit, it's most likely these scum are attempting to cash-in on Take-Two while they are vulnerable; nothing like hyped controversy to sway a jury.

  • Game-o_O

    Posted Feb 2, 2006 9:27 pm GMT

    Take Two is only a producer of GTA:SA, that won't stop Rock Stars from making another one. How come Take Two is getting all the rap, when it was Rock Stars that made it. People afraid to sue people with more money then all their connections combined?

  • Lostpoet85

    Posted Feb 2, 2006 9:23 pm GMT

    I'm not too worried, the whole thing is about greed, on either side. Take Two will survive I'm sure of it, at least Hilary Clinton hasn't reared her ugly head in awhile. Then again, maybe she's behind this! If you can't kill free speech with puritan morality, do it with accusations of fraud and lost money!

  • abdu4

    Posted Feb 2, 2006 9:19 pm GMT

    When is it gonna stop

  • chibi-acer

    Posted Feb 2, 2006 9:04 pm GMT

    These lawsuits appear to be about illegal business practices. This would make the issue more about jail time than money.

  • vroenis

    Posted Feb 2, 2006 8:59 pm GMT

    business is business - this has little or nothing to do with hot-coffee. often times investors don't care about the nature of a given company's product, as long as it sells and the company's business practicies benefit them, be they legal or not. that's just the nature of investing.

  • lilbluesmurfmg

    Posted Feb 2, 2006 8:56 pm GMT

    If the world wasn't half as money hungry I bet 'Hot Coffee" and everything else about Take-Two would have been forgotten a month after it was reported. Money and politics.... something evil is just laughing it's tail off right about now.

Subscribe to GameSpot's YouTube Channel

Hot Stories

Newsmakers

Featured Stories

Tags

take two

Submit News

Got tips? Send them in!