Grand Theft Options

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February 14, 2007 10:43 PM

The former CEO of the video game company that produced the blockbuster "Grand Theft Auto"  has pled guilty to criminal charges brought by the Manhattan District Attorney and settled civil charges brought by the Securities and Exchange Commission, the District Attorney announced today.

Ryan Brant, the founder of Take-Two Interactive Software, agreed to pay $7.3 million in connection with the guilty plea to felony charges of falsifying business records and the SEC settlement.  He also agreed to accept a permanent prohibition against holding management control positions at public companies.

"The [SEC] complaint alleges that Brant, with the participation and knowledge of senior executives and others at Take-Two, looked back and picked grant dates to coincide with historically low prices, and that he did so, in virtually all instances, without Board approval for either the grant dates or exercise prices," Christopher Conte, an Associate Director in the Division of Enforcement, said in a statement. 

Brant made no admission of wrongdoing in his settlement with the SEC, and he is expected to receive a sentence of probation for his plea in the criminal case.

"I am deeply sorry for my role in the inappropriate manner Take-Two granted incentive stock options," Brant, Take-Two's former chief executive and chairman, said in a statement to Reuters news agency. "I accept responsibility for my actions and apologize to the company's shareholders," said Brant.

According to Reuters, Take-Two said on Jan. 22 that a review of its past stock option grants had found that Brant engaged in a pattern and practice of backdating options between April 1997 and August 2003. 

The company said in an SEC filing that the review showed Take-Two failed in many cases to comply with the terms of its stock option plans and did not have adequate compliance procedures.

In June 2005, Brant and three other former Take-Two executives paid $14 million to settle a SEC lawsuit and closed a nearly four-year investigation into the company's alleged fraudulent accounting practices, Reuters said.