GT Interactive Software Corporation - Securities Class Action

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Copyright (c) 2001
Stanford Law School

GT Interactive Software Corporation Conclusion: As reported by the Company’s FORM 10-K For The Fiscal Year Ended June 30, 2002, Following the remand to the District Court, the parties engaged in extended settlement negotiations, including a mediation and a neutral evaluation proceeding and executed a stipulation of settlement. By order entered July 22, 2002 the District Court approved the settlement, which is to be funded through insurance proceeds.

According to the same SEC filing, in January, February and March 1998, ten substantially similar complaints were filed against the Company, its former Chairman and its former Chief Executive Officer, and in certain actions, its former Chief Financial Officer, in the U.S. District Court for the Southern District of New York. The plaintiffs, in general, purport to sue on behalf of a class of persons who purchased shares (and as to certain complaints, purchased call options or sold put options) of the Company during the period from December 15, 1995 through December 12, 1997. In their consolidated and amended complaint, the plaintiffs allege that the Company violated the federal securities laws by making misrepresentations and omissions of material facts that allegedly artificially inflated the market price of the Company's common stock during the class period. The plaintiffs further allege that the Company failed to expense properly certain prepaid royalties for software products that had been terminated or had failed to achieve technological feasibility, or had overstating the Company's net income and net assets. By Order dated January 23, 1999, the plaintiffs were granted leave to file a second consolidated and amended complaint, which added claims under the federal securities laws against the Company's former independent auditors, Arthur Andersen LLP. The Company and Arthur Andersen LLP each filed motions to dismiss the second consolidated and amended complaint. By Order and opinion dated November 29, 1999, the District Court granted the motion to dismiss. Plaintiffs appealed from the dismissal of the action, and on July 11, 2000, the Court of Appeals for the Second Circuit issued an opinion and judgment reversing the dismissal of the complaint as to the Company and individual defendants (but not as to Arthur Andersen LLP) and remanding the action to the District Court. On July 21, 2000, the Company filed with the Court of Appeals a petition for rehearing with suggestion for rehearing en banc. On September 1, 2000, the Court of Appeals denied the petition for rehearing and suggestion for rehearing en banc.

The complaint alleges that purchasers of GTIS securities were induced by fraud to pay too much for their shares. The complaint further alleges violations of the federal securities laws on behalf of GTIS securities purchasers during the period Aug. 1, 1996 through Dec. 12, 1997. The complaint alleges that GTIS and certain of its top officers improperly capitalized research and development expenses for projects that were discontinued or for which technological feasibility had not been achieved. In addition, the complaint charges that defendants failed to write off impaired assets. The effect of these improper practices, according to the complaint, was to artificially inflate GTIS' reported earnings and the price of its securities. During the period of this artificial inflation, certain defendants are alleged to have sold large amounts of shares from their personal portfolios.

INDUSTRY CLASSIFICATION:
SIC Code: 7372
Sector: Technology
Industry: Software & Programming

COMPANY/ISSUER NAME:	GT Interactive Software Corporation
COMPANY/ISSUER TICKER:	GTIS
COMPANY WEBSITE:	http://www.gtinteractive.com/

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Herzog, et al. v. GT Interactive Software Corporation, et al.

COURT: S.D. New York	DOCKET NUMBER: 98-CV-00085
JUDGE NAME: Hon. Sidney H. Stein
DATE FILED: 01/07/1998	SOURCE: Business Wires
CLASS PERIOD START: 08/01/1996	CLASS PERIOD END: 12/12/1997
TYPE OF COMPLAINT: Unamended/Unconsolidated
PLAINTIFF FIRMS IN THIS OR SIMILAR CASE:
Kirby McInerney & Squire LLP 830 Third Avenue 10th Floor, New York Ave, NY, 10022 (voice) 212.317.2300, (fax) , Lionel Z. Glancy 1801 Avenue of the Stars Suite 308, Los Angeles, CA, 90067 (voice) 310.201.9150, (fax) , _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 2

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint for Violation of the Federal Securities Laws
Type: Complaint		Date on the document: 01/07/1998
Docket
Type: Docket		Date on the document: 10/06/2000

REFERENCE COMPLAINT

In Re: GT Interactive Securities Litigation

COURT: S.D. New York	DOCKET NUMBER: 98-CV-00085
JUDGE NAME: Hon. Sidney H. Stein
DATE FILED: 02/05/1999	SOURCE: Business Wires
CLASS PERIOD START: 12/15/1995	CLASS PERIOD END: 12/12/1997
TYPE OF COMPLAINT: Second Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Kaufman Malchman Kirby & Squire, LLP 919 Third Ave 11th Flr, New York, NY, 10022 (voice) 212.371.6600, (fax) , Kirby McInerney & Squire LLP 830 Third Avenue 10th Floor, New York Ave, NY, 10022 (voice) 212.317.2300, (fax) , Lionel Z. Glancy 1801 Avenue of the Stars Suite 308, Los Angeles, CA, 90067 (voice) 310.201.9150, (fax) , Lockridge, Grindal, Nauen P.L.L.P. Suite 301, 660 Pennsylvania Avenue Southeast, Washington, DC, 20003-4335 (voice) 202.544.9840, (fax) 202.544.9850, Wolf Popper, LLP 845 Third Avenue, New York, NY, 10022-6689Ave (voice) 877.370.7703, (fax) 212.486.2093, IRRep@wolfpopper.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 5

DOCUMENTS FOR THE REFERENCE COMPLAINT
U.S. District Court Civil Docket
Type: Docket		Date on the document: 11/04/2002
U.S. District Court Civil Docket
Type: Docket		Date on the document: 09/11/2003

OTHER DOCUMENTS

Case Name and/or Number:
Type:		Date on the document:

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