Take-Two Internal Investigation Reveals Improprieties

Officials from publisher Take-Two have announced that preliminary findings of its internal investigation have been filed and have turned up "improprieties in the process of granting and documenting stock options." The investigation, which is independent of the investigation being undertaken by the U.S. Securities and Exchange Commission (SEC), was launched earlier in the year, and has repeatedly been cited as the cause for the delay in the publisher's quarterly financial reports, leading to multiple delisting warnings from NASDAQ. According to Take-Two, the Special Committee of its Board of Directors, retaining independent legal counsel, underwent "review and analysis of documents and emails, and interviews of current and former officers, directors, employees and advisors to Take-Two." As a result, it found "improprieties in the process of granting and documenting stock options and that incorrect measurement dates for certain stock option grants were used for financial accounting purposes," though it adds that it did not find any account of misconduct by Take-Two's current top executives, including CEO and president Paul Eibeler, and CFO Karl Winters. While the final report and recommendations have yet to be prepared, Take-Two's management has stated that it will restate former financial statements to rightly take the stock option grants into account, and as such, all financial statements and earnings releases from 1997 to the company's most recent report on April 30th are not to be relied upon. Finally, Take-Two has said that after a meeting with NASDAQ to request more time to file its latest financial report due to the ongoing investigations, it expects to remain listed pending a final judgment from NASDAQ's qualifications panel.