Ex-Take Two CEO pleads guilty
EmptyNEW YORK -- The former chairman and chief executive of Take-Two Interactive Software Inc., maker of the "Grand Theft Auto" video-game series, pleaded guilty Wednesday to making a false filing as part of a stock-option backdating scheme.
Ryan A. Brant, 35 years old, entered his plea at a hearing before New York State Supreme Court Justice Brenda Soloff in Manhattan.
"I am deeply sorry for my role in the inappropriate matter," Brant said in a statement. "I accept responsibility for my actions and apologize to the company's shareholders."
Lawrence Iason, Brant's lawyer, said afterwards that his client has agreed to pay $7.3 million in disgorgement, interest and penalties in connection with the criminal case by the Manhattan District Attorney's office and a civil probe by the Securities and Exchange Commission. About $1 million will be paid in connection with the criminal case, Iason said.
Brant, who founded the New York-based company in 1993, agreed to settle the SEC probe without admitting or denying wrongdoing and agreed to a bar from serving as an officer or director of a public company, Iason said.
Iason said Brant will receive probation as part of his plea agreement in the criminal case. Sentencing is set for Aug. 1.
Manhattan District Attorney Robert M. Morgenthau is expected to have a press conference on Brant's plea later Wednesday.
In a civil complaint filed as part of the settlement on Wednesday, the SEC alleged Brand, from April 1997 to September 2003, fraudulently enriched himself and others at Take-Two by backdating stock option grants to coincide with dates the company's stock was trading at historical lows. The civil complaint was filed in federal court in Manhattan.
Brant, of Bedford Corners, N.Y., allegedly granted options to himself and others at the company without complying with Take-Two's existing stock-option plan and without approval of its board of directors, the SEC said.
The SEC said Brant personally received 10 grants of backdated options totaling about 2.1 million shares adjusting for splits. He exercised all of those options, receiving millions of dollars in illicit compensation, the regulator said.
As a result of Brant's actions, Take-Two filed materially false and misleading statements about its stock option grants, the SEC said. The company also materially understated its compensation expenses and materially overstated its quarterly and annual pretax results and per-share results, the SEC said.
Take-Two accused Brant last month of engaging in a backdating scheme spanning a six-year period. Take-Two said in July that the Securities and Exchange Commission was probing its options-granting process.
In December, the company said a review by independent investigators uncovered improprieties in its options granting process. The review by an outside law firm covered a period beginning with the company's initial public offering in April 1997.
Brant was CEO until February 2001 and chairman until March 2004. He resigned his post as vice president of production in October.
More than 100 companies are being probed nationwide as federal and state regulators take a harder look at option-granting practices and a number of executives have lost their jobs as a result.
A spokesman for Take-Two didn't immediately return a call for comment.