SEC Settles Backdating Charges with Former Video Game Exec

February 20, 2007 ( - The Securities and Exchange Commission (SEC) has filed and settled civil charges against the former Chief Executive Officer and Chairman of the Board of Take-Two Interactive Software, Inc. for backdating stock options for himself and others.

According to a press release  from the SEC, Ryan Brant backdated stock options that benefited him and other officers at the company during a seven-year period. Brant was CEO and Chairman of the company that manufactures and distributes the Grand Theft Auto video game.

Brant has pled guilty to felony criminal charges with the New York County District Attorney’s Office of falsifying business records and agreed to pay $1 million in lieu of fines and forfeiture.

Take-Two said in January that Brant was responsible for issuing a significant number of backdated stock option grants and said that it would have to restate its earnings as a result (See Video Game Maker Reveals Backdated Options ).

Brant did not admit to or deny the SEC’s allegations, but agreed to pay a total of $6,261,606, which includes $4,118,093 with $1,143,513 in prejudgment interest he gained from backdating the options and a $1 million civil penalty.  

He also consented to an order that would permanently bar him from violating or aiding and abetting violations of the antifraud, reporting, recordkeeping, internal controls, and securities ownership reporting provisions of the federal securities laws and permanently blocking him from serving as an officer or director of a public company.      

The SEC alleges that from 1997 through September 2003, Brant and other executives picked grant dates for the company’s incentive stock options that coincided with dates of historically low annual and quarterly closing prices for Take-Two’s common stock. Brant granted options to himself and others, mostly without board approval.  

From 1997 to September 2003, Brant awarded himself ten backdated option grants, representing a total of approximately 2.1 million shares of Take-Two common stock, and exercised all those options before resigning from Take-Two on October 16, 2006, according to the charges.

The agency said Brant knew, or was reckless in not knowing, that the financial reports the company filed with the SEC were incorrect because of the backdated options grants.