The original complaint charges Take-Two and certain of its officers and directors with violations of the Securities Exchange Act of 1934 by issuing a series of materially false statements regarding the success of the Company's video game Grand Theft Auto: San Andreas and the strong contribution that it was making to the Company's overall revenues. Specifically, defendants failed to disclose that Take-Two improperly hid pornographic materials directly in the programming of the Grand Theft Auto: San Andreas in order to obtain a rating of "Mature 17+" by the powerful Entertainment Software Rating Board ("ESRB"). As alleged in the Complaint, had the ESRB known of the pornographic materials contained in the game, it would have assigned it a rating of "Adults Only 18+" and it would not have been carried for sale in the major retail chains, who refuse to carry such games. Indeed, when it was subsequently disclosed that the ESRB had revised its rating on the game to "Adults Only 18+," the Company was forced to reduce its financial guidance.
The complaint further alleges that on or around January 27, 2006, it was announced that the City Attorney for the City of Los Angeles filed an action against the Company and its subsidiary, Rockstar, in the Superior Court of the State of California alleging, that Take-Two and Rockstar violated sections of the California Business and Professions Code by publishing untrue and misleading statements and engaging in unfair competition. On this news, Take-Two's stock fell below $14 per share.
On July 12, 2006, the Court entered the Order signed by U.S. District Judge Shirley Wohl Kram granting the motion to appoint The New York City Employees' Retirement System, The New York City Police Pension Fund, and the New York City Fire Department Pension Fund to serve as lead plaintiffs, and approving lead plaintiffs’ selection of lead counsel. Lead case, 06-803, is consolidated with member cases: 06-987, 06-1131, and 06-1733. On September 11, 2006, the plaintiffs filed a Consolidated Amended Complaint. Prior to any motions to dismiss the consolidated complaint, plaintiffs filed a Second Amended complaint on April 16, 2007.
Defendants did move to toss the second complaint on June 25, 2007 along with subsequent motions by individuals and third parties throughout July 2007.
On May 07, 2008, an order to schedule for lead plaintiffs’ motion to amend until it has rendered a decision on lead plaintiffs’ request to view GTA; SA’s binary code was entered. On August 08, 2008, an order stating that the court needs further briefing on the appropriate standard for evaluating the defendants request to expunge the determination was entered. Lastly, an opinion and order granting lead plaintiffs access to GTA:SAs binary code was entered on August 22, 2008.
According to a press release dated April 17, 2008, a judge has booted claims from a securities suit against Take-Two Interactive Software Inc. that alleged the company failed to disclose that pornographic material was hidden in its “Grand Theft Auto: San Andreas” video game, but she allowed options backdating claims to go forward and gave the plaintiffs leave to amend their complaint.
On September 02, 2009, this case was reassigned to Judge Richard J. Sullivan from Judge Shirley Wohl Kram who is no longer assigned to the case.
On June 29, 2010, the Court approved a preliminary settlement on behalf of the class defined for settlement purposes only.
On October 18, 2010, an Order Approving Plan of Allocation; an Order Awarding Attorneys' Fees; and a Judgment and Order of Dismissal were issued by the Court in accordance with the stipulation of the parties.