NEW YORK (Reuters) - A judge has dismissed several claims accusing Take-Two Interactive Software Inc (TTWO.O) of misleading shareholders about an installment of its popular “Grant Theft Auto” video game that contained hidden sex scenes and caused a consumer uproar.
While the plaintiffs will be allowed to replead their case by submitting an amended suit, the ruling by U.S. District Judge Shirley Wohl Kram in Manhattan found that the current claims did not adequately show that the company intended to deceive investors about the hidden content in its “Grand Theft Auto: San Andreas” game.
Take-Two is currently trying to fend off a $2 billion hostile buyout bid by rival Electronic Arts Inc ERTS.O.
Take-Two, which has new management after a shareholder coup, has been shaken by accounting scandals related to its stock option awards practices and controversy over its games. It is holding its annual meeting on Thursday.
The securities fraud suit, brought in 2006, accused Take-Two of misrepresenting its compliance with the rules of the video game industry’s rating board when submitting the “San Andreas” title for review, as well as issuing false statements about its option awards practices.
Last year, former Take-Two Chief Executive Ryan Brant pleaded guilty to criminal charges over backdating options. Other top executives also pleaded guilty.
In a written ruling on Wednesday, Judge Kram said the investors’ backdating case could move forward, but she said that in one instance the plaintiffs did not adequately show a link between the fall in the company’s stock price and the alleged misrepresentations by Take-Two. The rejection of the alleged link could ultimately limit the plaintiffs’ damage claims.
“We are pleased with the judge’s ruling, which dismissed without prejudice the plaintiff’s claims regarding Grand Theft Auto: San Andreas and narrowed the scope of the options backdating case,” Take-Two said. “We continue to believe that the remaining claims are without merit and we will continue to defend against them.”
A lawyer for the plaintiffs did not return a phone call requesting comment.
Take-Two announced in November that it had reached a preliminary settlement in a separate consumer lawsuit brought over the hidden content in the “San Andreas” game.
Reporting by Martha Graybow; editing by John Wallace