After the city of Los Angeles filed suit against Take-Two Software for selling pornographic videogames to children, the game developers stock plummeted on Friday. At the close of Friday, Take-Two share were at $14.69 down 13.7%. Earlier in the day, the stock had hit a three-year low of $13.68.
The game named in the suit is GRAND THEFT AUTO: SAN ANDREAS, which had its rating changed from MA "Mature 17+" to AO "Adults Only 18+ after it was discovered that it contained hidden sex scenes.
Los Angeles City Attorney Rockard Delgadillo, in the suit, claims the develop deceived consumers by concealing the scenes then tried to cover it up by claiming that hackers had modified the original version of the games.
The lawsuit demands that Take-Two and Rockstar Games, the subsidiary behind GRAND THEFT AUTO, to stop marketing the games to children, pay fines and return $10 million in profits. In addition, the suit requests a $2,500 fine for each untrue or misleading statement the company allegedly made about the games.
A Take-Two spokesman had no comment.
Previously, consumers in New York sued the company over the controversy and are seeking class action status. Take-Two also disclosed in July that the Federal Trade Commission was investigating advertising claims related to the controversial game.
Earlier last week, Take-Two announced several changes to the company's board of directors, including the addition of Michael J. Malone as a new member, the resignation of Barbara A. Kaczynski, and new responsibilities for current board members Robert Flug and Todd Emmel.
Flug, a director of the company since 1998, was named non-exec chairman of the board on an interim basis. Emmel, a director of the company since 2002, will serve as acting audit committee chairman.
Headquartered in New York City, Take-Two Interactive Software Inc. is an integrated global developer, marketer, distributor and publisher of interactive entertainment software games and accessories for the PC, PlayStation, PlayStation 2, PSP, Xbox, Xbox 360, Nintendo GameCube, Nintendo DS and Game Boy Advance. The company publishes and develops products through its wholly owned labels Rockstar Games, 2K Games, 2K Sports and Global Star Software; and distributes products in North America through its Jack of All Games subsidiary. Take-Two also manufactures and markets videogame accessories in Europe, North America and the Asia Pacific region through its Joytech subsidiary. The company maintains sales and marketing offices in Cincinnati, New York, Toronto, London, Paris, Munich, Madrid, Vienna, Milan, Sydney, Breda (Netherlands) and Auckland. Take-Two's common stock is publicly traded on NASDAQ. For more information, visit www.take2games.com.
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