ENFORCEMENT PROCEEDINGS - Take-Two Pays $3 Million Penalty to Settle Options Backdating Charges

http://www.tradingmarkets.com/.site/news/Stock%20News/2253293/

Apr 01, 2009 (SECURITIES AND EXCHANGE COMMISSION RELEASE/ContentWorks via COMTEX) --
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-- The Securities and Exchange Commission today announced the filing of
a civil action against video and computer game publisher and
distributor Take-Two Interactive Software, Inc. (Take-Two), alleging
that during a seven year period, Take-Two defrauded investors by
granting backdated, undisclosed "in the money"
stock options to officers, directors, and key employees while failing
to record required non-cash charges for option-related compensation
expenses.

The Complaint alleges that on over 100 occasions from 1997 through
September 2003, Take-Two looked back and picked grant dates for the
Company's incentive stock options, resulting in grants of
"in-the-money" options. According to the Complaint, Take-Two used
several means to backdate options, including pre-priced option pools,
backdating of employment
agreements, and "pick-a-date" backdating, whereby a set exercise price
for the grants was chosen, and then a past grant date was selected when
Take-Two's stock price most closely corresponded to the set exercise
price. On at least 26 occasions, the backdated grant dates coincided
with dates of historically low annual and quarterly closing prices for
Take-Two's common stock. These "fortuitous" grant dates, the complaint
alleges, could not have been selected so consistently without the
benefit of hindsight. According to the Complaint, Take-Two granted
these options without complying with its own stock option plans and,
generally, without the Board or a Committee thereof approving the grant
dates or exercise prices. Company documents falsely indicated that the
option grants had been made on earlier dates when Take-Two's stock
price had closed lower.

The Complaint alleges that because of the undisclosed
backdating scheme, Take-Two filed with the Commission and disseminated
to investors current, quarterly and annual reports, proxy statements
and registration statements that contained materially false and
misleading statements concerning the true grant dates and proper
exercise prices of stock options. In doing so, Take-Two created the
false and misleading impression that stock options were granted in
accordance with the terms of the applicable stock option plans.
According to the Complaint, Take-Two materially understated its
compensation expenses and materially overstated its quarterly and
annual pre-tax earnings and earnings per share in its financial
statements. On February 28, 2007, Take-Two restated historical
financial results for multiple years to record additional non-cash
charges for option-related compensation expenses totaling $42.1 million
net of tax.

Without admitting or denying the allegations of the
Commission's Complaint, Take-Two consented to the entry of an order:
(1) permanently enjoining it from violating Section 17(a) of the
Securities Act of 1933, S