Officials from major game publisher/developer Take-Two Interactive have announced that the company has received a notice from the U.S. Securities and Exchange Commission (SEC) that it is conducting an informal non-public investigation into certain stock option grants made by the company from January 1997 to the present.
According to Take-Two, which is the parent company of labels including 2K Games and Rockstar Games, the company has already initiated an internal review of the company’s option grants, led by a committee consisting of independent board members, who have retained independent legal counsel and accountants to assist in the review.
The company has promised, in an official press statement, that it intends to respond to the SEC's information request and to "fully co-operate" in the informal investigation. There is no other indication as to the exact nature of the investigation, but an Associated Press story regarding the statement explains: "Take-Two is one of a growing number of companies under internal or Securities and Exchange Commission investigations for possible mishandling of stock option grants. Many companies are alleged to have backdated stock option grants to time them at share price lows, thus boosting gains on the sale of the stock."
But in addition, the statements made by former Take-Two Audit Committee chair Barbara A. Kaczynski earlier in 2006 claiming "an increasingly unhealthy relationship between senior management and the board of directors" at the Rockstar, 2K Games, Global Star Software and Joytech owner, especially regarding the late filing of the firm's accounts, cannot have helped take regulatory eyes away from Take-Two's accounts.