Take-Two Interactive Software, Inc. (NASDAQ: TTWO) today announced that it entered into two separate settlement agreements with the Securities and Exchange Commission (the “SEC”) and the District Attorney, New York County, New York (the “District Attorney”), both of which relate to previously disclosed investigations of the Company’s historical stock option granting practices.
Without admitting or denying the SEC’s allegations, the Company has agreed to pay a civil penalty of $3.0 million, and has stipulated to an injunction against future violations of certain provisions of the federal securities laws. The settlement is subject to approval by the United States District Court for the Southern District of New York. If court approval is obtained, the settlement will conclude the SEC’s investigation of this matter with respect to the Company.
As part of the settlement agreement with the District Attorney, the Company acknowledged that certain of its former directors and officers engaged in certain illegal behaviors related to the historical granting of stock options, and the District Attorney agreed not to prosecute the Company or its corporate subsidiaries for conduct related thereto. In addition, the Company agreed to pay $300,000 to the District Attorney for reimbursement of costs related to the District Attorney’s investigation, to undergo a review of its corporate governance structure by external legal counsel, and to hire an administrator for its stock plan.
Take-Two previously accrued the estimated expense for these settlements in its fourth quarter of fiscal 2008. The other civil litigation related to the Company’s historical stock option granting practices remains outstanding.
“We are pleased to have reached a settlement with both the SEC and District Attorney with respect to the Company’s historical stock option granting practices,” said Strauss Zelnick, Chairman of Take-Two. “Resolving this issue has been a key objective for Take-Two since the current management team took office in early 2007, and we are gratified to have put this matter behind us.”