Video game developer and publisher and Rockstar Games/2K Games owner Take-Two Interactive's troubles with the Securities and Exchange Commission have now ended, after the game publisher agreed to settle recent legal troubles with the SEC for $7.5 million. The settlement includes no admission of wrongdoing to the charges made by the SEC, though it includes an agreement not to violate specific clauses of the Securities Act of 1933 and the Securities Exchange Act of 1934.
The thrust of Take-Two's alleged violations was its inflated revenue reporting in fiscal years 2000 and 2001, just before and around the time that the company hit it big with blockbuster Grand Theft Auto III. The SEC claimed that Take-Two would report false revenue derived from shipping unsolicited copies of games to retailers who were not required to pay for them, which it would mark on its balance sheets before accepting the returned copies in a later financial quarter.
Several Take-Two executives face financial penalties as a result of the settlement, as well as interest on the penalties accrued since the alleged initial infraction. Former chairman and CEO Ryan Brant will pay a total of $3.6 million; former executive VP and COO Larry Muller will pay a total of $1.7 million; former CFO James David will pay a total of $994,000; and current VP of sales Robert Blau will pay a total of $104,500.
Paul Eibler, Take-Two's current president and CEO, commented: "The comprehensive company-wide changes we have instituted in recent years, including implementing a series of internal controls and procedures designed to ensure that our financial reporting processes meet the highest standard of integrity and professionalism, and making key additions to our senior executive team and Board of Directors, have made our company much stronger."