Former Counsel of Video Game Maker Gets Law License Suspended

August 3, 2009 (PLANSPONSOR.com) - A New York state appellate court has suspended for three years the Empire State law license of the former general counsel of a New York video games maker in connection with backdating stock options.

A New York Law Journal report said the penalty was handed down against Kenneth Selterman in connection with stock-option backdating activities at Take-Two Interactive Software where Selterman served as general counsel from 1999 to 2007. The company makes the popular “Grand Theft Auto” game series.

The Law Journal report said a lawyer disciplinary committee had recommended a one-year license suspension for Selterman, but the court opted for a more severe penalty in light of his position, “level of sophistication and legal experience and his apparent lack of remorse.”

Both Selterman and Take-Two’s former chief executive officer, Ryan A. Brant, pleaded guilty to charges stemming from a 2002 NASDAQ investigation of stock backdating. In mid-2007, Selterman pleaded guilty to a misdemeanor charge of falsifying business records, agreed to pay a $50,000 fine, and was sentenced to three years probation (see Take-Two General Counsel Sentenced in Options Backdating Case ).

At the time of his sentencing, Selterman acknowledged sending a letter containing “false information” to NASDAQ in response to an inquiry about the company’s stock option plans.

Selterman stated that he then drafted a letter on March 14 to NASDAQ to correct the information in the first letter, but Brant asked him not to send it, saying, according to the decision, that would not be in “the best interests of the company.” According to the news report, Selterman agreed to that request and never corrected the false information.

The five-judge Appellate Division panel asserted that Selterman’s “inconsistent testimony about his culpability of the intentional fraud should have been construed as a lack of remorse‚Ķ.”

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