USA Today: Take-Two Allowed Brant to get Away With Backdating
Here’s the story as reported by Edward Iwata at USA Today:
“Take-Two Interactive Software, maker of Grand Theft Auto and other popular video games, failed to monitor stock-option grants, including a significant number that were backdated over a six-year period, according to an internal report released Monday by the company.
The report found that Take-Two’s (TTWO) compensation committee abandoned its responsibilities and allowed former CEO Ryan Brant “to control and dominate the granting process” and engage in “a pattern and practice of backdating options” from 1997 to 2003.
Brant resigned as CEO five years ago and as chairman last October.
The investigation, by the BDO Seidman accounting firm and the law firm Kasowitz Benson Torres & Friedman, found no evidence that Take-Two’s current executives engaged in misconduct, or that the company’s former or current directors “engaged in willful misconduct or other dishonest acts.”
However, the report found that three former Take-Two executives — a former controller and two former chief financial officers that the report did not name — “appear to have had significant involvement in the company’s stock-option granting process” and declined to appear for interviews with investigators.
Also Monday, Take-Two said that the Nasdaq Stock Market warned the firm that its failure to file its Form 10-K with the Securities and Exchange Commission for the company’s fiscal year ended Oct. 31 was another reason to delist the firm from Nasdaq.
Nasdaq already had warned Take-Two last year that it faced possible delisting for failing to hold its 2006 shareholders meeting and for not filing its quarterly earnings report with the SEC for the company’s third quarter.
Take-Two said Monday it will file its required SEC forms “as soon as practicable,” and will combine its 2005 and 2006 shareholders meetings. Take-Two said in December that it will restate its finances for the fiscal years from 1997 to 2006.
The company disclosed last August that it had received grand jury subpoenas on its stock options from Manhattan District Attorney Robert Morgenthau.
Two years ago, the SEC alleged that Brant, former chief operating officer Larry Muller, former chief financial officer James David Jr. and vice president of sales Robert Blau fraudulently inflated the company’s revenue by $60 million for 2000 and 2001.
Without admitting or denying the charges, the men and Take-Two agreed to pay penalties totaling $9 million and to disgorge more than $5 million in bonuses and interest.”
