Activision Confirms Formal SEC Probe

Officials from Activision have confirmed that the Securities and Exchange Commission (SEC) has launched a formal probe into alleged stock option backdating at the company. According to details in the company’s amended quarterly SEC report, Activision was informed of the probe early this month, following an informal inquiry in 2006. The move follows a similar investigation at Take-Two Interactive, which was first the subject of a non-formal investigation and now a formal one. Other video games companies such as THQ and Electronic Arts, and hundreds of others in unrelated industries, have also been the subject of purely informal investigations. The backdating of options is not necessarily illegal, depending on whether it is reported to investors; hence the large number of companies involved. The new, formal investigation at Activision will allow regulators to subpoena witnesses over stock option practices of the company, its directors, officers and employees. It will also require the company to produce requested documents. According to an Associated Press report, Activision is co-operating with the probe, with representatives of the U.S. Department of Justice also attending some of the company’s meetings with the SEC – although no grand jury subpoenas or written requests from the Justice Department have been issued.