According to the law firm press release, Electronic Arts develops, markets, publishes and distributes video game software content and services that can be played by consumers on a variety of Internet-based electronic devices for video game consoles, personal computers, mobile phones, tablets and electronic readers.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements highlighting the purported strength of the Company’s rollout of version 4 of its all-important Battlefield video game series, which had provided approximately 11% of its revenues in fiscal 2012. Based on the purported strength of the Battlefield 4 rollout then underway, defendants issued strong fiscal 2014 financial guidance for the Company and actually increased that guidance on October 29, 2013. The price of Electronic Arts’ stock steadily climbed on these statements, reaching a Class Period high of $28.13 per share by August 23, 2013 and allowing certain of Electronic Arts’ senior executives to sell their Electronic Arts stock at artificially inflated prices.
The complaint further alleges that, on November 15, 2013, the day Sony released its new Play Station 4 (“PS4”) console, it was disclosed that players of Electronic Arts’ games were being subjected to multiple glitches and significant crashes when attempting to play Electronic Arts’ titles on PS4. The price of Electronic Arts stock fell on these disclosures, declining more than 7% from a close of $25.96 per share on November 14, 2013 to close at $24.06 per share on November 15, 2013. Then, on December 4, 2013, it was disclosed through discussions defendants had with video game bloggers that due to bugs, connectivity issues, server limitations, and various other problems plaguing Battlefield 4, Electronic Arts had been forced to indefinitely halt the Battlefield 4 rollout and other projects until the problems with Battlefield 4 could be fixed. The price of Electronic Arts shares declined on this news from a close of $22.34 on December 4, 2013 to close at $21.01 on December 5, 2013, sending the share price down more than 28% from its Class Period high.
According to the complaint, defendants’ Class Period statements were materially false and misleading because they failed to disclose and misrepresented the following adverse facts which were known to or recklessly disregarded by defendants: (a) Battlefield 4 was riddled with bugs and multiple other problems, including downloadable content that allowed players access to more levels of the game, a myriad of connectivity issues, server limitations, lost data and repeated sudden crashes, among other things; (b) as a result, Electronic Arts would not achieve a successful holiday season 2013 rollout of Battlefield 4; (c) the performance of the Electronic Arts unit publishing Battlefield 4 was so deficient that all other projects that unit was involved in had to be put on hold to permit it to focus its efforts on fixing Battlefield 4; and (d) as a result, Electronic Arts was not on track to achieve the financial results it had told the market it was on track to achieve during the Class Period.
On February 25, 2014, the Court appointed the Lead Plaintiffs and approved the Lead Counsel.
On April 11, 2014, the Plaintiffs filed a Consolidated Complaint For Violations Of The Federal Securities Laws. The Consolidated Complaint states that the defendants violated §10(b) of the 1934 Act and Rule 10b-5 by their acts and omissions. By virtue of their positions as controlling persons, the Plaintiffs believe the defendants are liable pursuant to §20(a) of the 1934 Act. As a direct and proximate result of defendants’ wrongful conduct, plaintiffs and other members of the Class suffered damages in connection with their purchases of the Company’s publicly-traded securities during the Class Period.
On June 9, 2014, the defendants filed for motion to dismiss the Plaintiffs' Consolidated Complaint for Violations of the Federal Securities Laws. The motion to dismiss was based on the grounds that the Complaint fails to state a claim and fails to comply with Rule 9(b) and the Reform Act.
On October 20, 2014, the Court issued an Order granting the defendants' above motion to dismiss. Plaintiffs were given leave to file an amended complaint no later than November 3.