Angry Shareholders Sue GTA Publisher
Game publisher Take Two is facing two more lawsuits, this time from separate shareholder groups seeking reparations for losses incurred over the discovery of pornographic material in Grand Theft Auto: San Andreas.
The suits were announced by the law firms Milberg Weiss on Tuesday and Stull, Stull & Brody earlier this week. Both seek class action status, and are looking for shareholders who owned Take Two stock between the launch of GTA: San Andreas in October 2004 and January 27 of this year, the day the company was sued by the Los Angeles city attorney's office.
Both complaints allege that Take Two acted illegally in concealing the pornographic material later found in the game, which "was the largest game launch in the Take Two's history," the company said at the time.
GTA: San Andreas played a large part in the positive earnings of the company, the suits allege, and when the discovery of the "Hot Coffee" mod was made public, the resulting drop in Take Two's stock price hurt investors financially.
Although the company did attempt to right itself, the surrounding publicity forced Take Two subsidiary Rockstar to pull the game from store shelves. GTA: San Andreas was rated AO, or adults only, by the ESRB -- a rating many retailers refuse to stock, significantly cutting into overall sales of the game.
Even the Federal Trade Commission stepped in, announcing it would investigate the game and the "Hot Coffee" mod. Worse yet, the company said it has found problems in its financial accounting, and a board member who was the audit committee chairperson and member of the corporate governance committee had resigned over the issue in late January.
According to a statement, she said that "management failed to keep the board informed of important issues."
At least one of the suits alleges insider trading so that higher-level executives could unload their stock to avoid heavy losses.
"Defendants were motivated to engage in the fraudulent and illegal conduct during the class period in order for company insiders, including the defendants, could sell more than 661,000 shares of their personally-held take-two stock for proceeds of over $18 million," a statement from the law firm read.
Take Two is refusing to comment on the matter.