A Manhattan Federal judge has ruled that publisher Take-Two can proceed in its lawsuit against former execs accused of illegal stock backdating.
Former CEO Ryan Brant already plead guilty
to the fraud in 2007 following an SEC investigation; he paid $7.3 million in penalties and received five years' probation from the New York State Supreme Court. A Take-Two accounting officer as well as an attorney also plead guilty to falsifying business records in the case.
The publisher had conducted its own internal investigation at the time and found "significant" backdating and other improprieties, and now, according to Reuters, it can proceed in a suit for securities fraud
against Brant as well as former execs Kelly Summer, Larry Muller and James David.
The Manhattan Judge in the case also upheld Take-Two's claim against Brant and Sumner under Delaware law -- although the publisher's corporate headquarters are in New York, the company is incorporated in Delaware.
Take-Two is pursuing the suit on behalf of its shareholders. In January 2007, when the publisher announced the results of its inquiry into the alleged fraud, the company faced multiple warnings of delisting from NASDAQ, the index on which it is traded.
Brant's activities as CEO resulted in Take-Two paying out a $7.5 million settlement to the SEC in 2005 over revenue inflation, separately from the backdating allegations, over which the company had to pay $3 million
to settle charges last year. The embattled Brant resigned from Take-Two in 2006