EA Admits SEC Stock Investigation

Electronic Arts has become the latest in an increasingly long line of publishers to be investigated by the U.S. Securities and Exchange Commission (SEC), with the commission requesting documents and information relating to stock option grant practices. According to a SEC filing by the company, the investigation extends from January 1st, 1997 to the present, but the company has refused to reveal any further details. However, the investigation follows allegations of backdating of stock options made by the Plumbers & Pipefitters Local No. 572 Pension Fund in August, which has since been voluntarily dismissed by the union. More than one hundred companies are now under investigation by the SEC to determine if they have manipulated the prices of stock options given to top executives. These allegations normally involve backdating the options to increase their value. The Internal Revenue Service (IRS) is also examining possible wrongdoing. A number of video games companies are amongst those under investigation, including Take-Two Interactive, Activision and THQ. In each case the company’s share price has been adversely affected, with Electronic Arts shares falling by 2 percent on Wednesday as a result of the news.