Law firm Schiffrin & Barroway has issued a statement giving notice of a class action lawsuit on behalf of all stock purchasers of Take-Two Interactive between October 25th, 2004 and January 27th, 2006, in another of a series of lawsuits for the firm, which has made itself a high profile target through recent events.
The complaint charges Take-Two and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants failed to disclose that Grand Theft Auto: San Andreas
, contained explicit and pornographic scenes, resulting in a reduced financial guidance in the wake of the “Hot Coffee” mod incident and the subsequent revised age rating for the game.
The complaints allege that Take-Two’s accounts payable, inventory and cost of goods accounts, capitalized software development costs and amortization expense were misstated. It also alleges that the company failed to cooperate with or assist its own audit committee and as a result Take-Two future earnings and guidance statements were severely flawed.
The lawsuit is similar to another announced earlier in the month from one of the company’s stockholders, which charged Take-Two with insider trading and mismanagement
. Take-Two itself predicted a number of such lawsuits in its recent SEC filing, with further suits believed to be in process but unannounced.
These combine with additional lawsuits from the city attorney of Los Angeles and the family of police officers killed by a man allegedly influenced by the game. With the company reporting disappointing financial results
and no new home console version of Grand Theft Auto
expected this year, the company is likely, whether rightly or wrongly, to come under increased legal and media pressure for some time to come.