Federal judge rules former CEOs and CFOs must defend themselves against claims of securities fraud for allegedly backdated stock options.
Though its last earnings report showed it is righting itself financially, Take-Two Interactive still has an axe to grind. To be exact, it has an axe to grind with four former executives who helped run the company during the previous decade. Reuters reports that a federal judge in New York has given the go-ahead for the owner of Grand Theft Auto developer Rockstar Games to sue its onetime leaders for securities fraud related to backdating stock options.
US District Judge Laura Taylor Swain reportedly said that Take-Two could proceed with the suit, as the "company specifically identified the alleged improperly backdated option grants and sufficiently alleged the defendants had an intent to deceive or defraud." (She dismissed several other claims that she deemed had been filed too late.) Exactly one year ago, Take-Two paid the Securities and Exchange Commission $3 million in a settlement that ended the investigation into the company.
The suit's defendants include ex-Take Two CFOs Larry Muller and James David and former CEOs Kelly Sumner and Ryan Brant. In February 2007, Brant pled guilty to first-degree felony charges of falsifying business records for his role in the publisher's stock-option backdating scandal. Brant left the company in October 2006, while Take-Two was the subject of an investigation by the Securities and Exchange Commission. Three months later, the publisher released the results of its independent investigation into the scandal and pinned the blame squarely on Brant.
The SEC found that from 1997 to 2003, Brant granted stock options to himself and other employees and altered the records regarding when the options were granted in order to make them instantly profitable to the receiver. In August 2007, he struck a plea deal that allowed him to avoid jail time. As part of his deal, Brant agreed to pay $6.3 million to settle the SEC's civil suit against him and another $1 million to New York state and local authorities. Take-Two's suit against him could make him liable for further monetary penalties.
During the 2000s, more than 200 US companies were accused of backdating stock options, including former GameSpot parent company CNET Networks.
What is this? "Sue-your-former-employer" year in the gaming industry? Don't tell me that these guys weren't even vaguely inspired by Infinity Ward...
Guys, please leave the politics out of this. I don't want to read some left wing or right idealogues on a gaming site. I gotta hear enough of your crap on every other site.
Kind of ironic, isn't it? Maybe they should start a new series called "Grand Fraud". You play as a rich CEO looking to get greedy and steel stuff. You have to bribe security and investigation officials, keep the accountants cooking your books happy, and hire thugs to scare whistleblowers and idealistic cops.
well that didnt take long. And ya this has become too much of a normality with these big business sharks.
@Gelugon_baat That's called full disclosure. If you are reporting on something and there's a possible conflict of interest you have to note it.
Ummm...instead of the comments about capitalism, please replace with the word greed as that is what really is the issue here. Seriously, these guys weren't making enough money they had to break the law to get more? Gordon Gekko said greed was good...of course that didn't work out to well for him either. Guess they forgot that part of the lesson.
The people responsible for marketing crap like GTA to little kids are . . are . dishonest crooks? . . . what a shock.
Brant has to shave his head because he cant afford to get hi hair cut anymore after he had to pay back all the money he stole.
that dude looks like that old bald headed tennis player who was married to that hot girl brooke sheilds. wonder if she is bald now too?
Any gamer who bashes on capitalism is an idiot. Name one country that has a primarily socialist economy that's known for preducing frequent, high quality games. That's right, you cant, because it doesn't happen. Although the worst of captilism is, obviously, bad, the best of socialism is worse. Socialism doesn't provide any incentives to strive for greatness, and as a result it leads to a reduction in quality entertainment...of any kind, this includes games. It leads to a reduction in quality art. It leads to a reduction in quality of services even (such as healthcare). And it leads to a reduction in overall quality of life. There's a reason the Soviet Union fell, and there's a reason that China didn't start to become an economic powerhouse until they adopted some aspects of capitalism. Socialism leads to stagnation, period. Capitalism may have it's bad side, but it's good side makes it far better than the alternative.
So you guys your parent always have to start with C? I wonder what would be the news after your current parent becomes former.
yeah cuz socialism & communism dont have any thiefs (or bad people in general), so lets switch to their government 'types'. who cares that capitalism has made the US the best country in existence, lets let the bad guys (again, that exist nowhere else) define it. great logic kids. ill bet ur unionized teachers taught u that.... but i digress. sad situation in any case (especially for the families that legitimately had nothing to do with the criminal behavior).
As rebornblood said: "capitalism". At it's most basic level. Also I would love to sit on this guys shoulders, like a son on his dads shoulders and play slap-head JUST to annoy him. Lol. ;-p
@electroban First of all, you don't need to mention his race. Second, there's a difference between a violent crime and a white collar crime. If they let the robber out, he's more likely to offend again. These guys are just smart... evil, but smart.
a black man robs a groccery store and gets 1,000 dollars, he gets caught and is given a few years in prison. These douche bags embezzle MILLIONS and buy their way out of prison with the stolen money. Good job.
Here we go with yet more corruption and greed based around massive amounts of money in the game industry and I hope the guilty face the music. Nobody cared all that much about games 20 years ago, but now that they make huge revenue...the corporate pigs are gathering around the trough plotting to make themselves rich instead of producing quality products. It's really sad that it has to be this way, but any industry that yields high gains will see the same shady white collar crimes that ruin every other big business.
Out of the entire list of reasons that Rockstar and Take-Two have been the suspect of lawsuits...this one I'm expecting TRUE justice.
@beprice3 Yeah, I know. I'm all for justice. I just get tired of the same ol' same ol'. Somehow an attitude of entitlement has taken over and no one cares about doing the right thing anymore. It's become way to rampant and it hurts everyone. It hurts the industry and we gamers end up paying in the end. We get nickel and dimed (micro-transactions), we get propoganda thrown at us, we get inflated prices, we get less quality, and we have to put up with this nonsense. BTW, Harrison was writing primarliy about the legal fiasco of the Beatles, not ambulance chasers. You could argue that this Take Two senario is not much different, except there is probably more culpability. It's still a mess, and few, if any, know what the "right thing to do" looks like. As a result the industry is flooded with law suits, which have a direct impact on us gamers. We all get screwed. May as well sing about it.
Yeah I'm glad they caught someone - but shouldn't they be looking at the some of the other laws broken by the banking industry, hedge funds, or health insurance, etc etc. So i guess the rules are don't get caught but if you pay us off we look the other way or even help you break the law-- that's what I've been seeing. It is just Odd that bernie madoff gets away with it for all of his life and these people are caught right away. Madoff had friends and family in the government and they let his biatch wife keep a few million for makeup. We end up paying for all of it. Any politicians take a pay cut yet? This is a democracy - lets all vote for that one!!!
@ Riprock This is not an ambulance chasing lawyer suing an insurance company. These guys are not playing sue me, sue you. These people need to be sued and brought up on charges.
HOW ODD -- if your a banker it's OK to BREAK the fking law. I guess these guys didn't pay off any politicians.
George Harrison said it best in his song lyrics... When you serve me and I serve you Swing your partners, all get screwed Bring your lawyer and I'll bring mine Get together, and we could have a bad time We're gonna play the sue me, sue you blues
Like these guys wouldn't have made enough anyway. The fat cats get richer. I hope they get what they deserve.
Doesn't it seem like a lot of lawsuits are flying around these days? Somebody's always suing somebody.
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