Another Parallel Civil/Criminal Stock Option Backdating Case
Today the SEC filed settled civil charges against Ryan Ashley Brant, formerly the CEO and Chairman of the Board of Take-Two Interactive Software, Inc. http://www.sec.gov/news/press/2007/2007-20.htm The SEC alleged that during a seven year period, Brant participated in a “pick-a-date” option granting scheme to grant undisclosed, “in the money” stock options to himself and to other officers and employees. Brant consented to disgorge ill-gotten gains of $4,118,093 with $1,143,513 in prejudgment interest, and to pay a $1,000,000 civil penalty, for a total of $6,261,606. The settlement is subject to the approval of the United States District Court for the Southern District of New York. Brant’s actions also caused Take-Two to materially misrepresent its financial condition to investors.
Associate Director Christopher Conte said, “The complaint alleges that Brant, with the participation and knowledge of senior executives and others at Take Two, looked back and picked grant dates to coincide with historically low prices, and that he did so, in virtually all instances, without Board approval for either the grant dates or exercise prices. This case highlights the need for public companies to ensure that their internal controls and oversight structures are adequate to prevent stock options from being granted in ways that are contrary to shareholder approved option plans.”
Separately, Brant has pled guilty to felony criminal charges of Falsifying Business Records in the First Degree and agreed to pay $1 million in lieu of fines and forfeiture, which will be distributed to state and local New York authorities. Brant previously settled with the Commission for his alleged role in a massive financial fraud at Take Two in 2000 and 2001.