THQ Faces Shareholder Suit

Updated from Nov. 21

Video-game publisher THQ(THQI Quote) is facing a shareholder lawsuit over its stock option grant practices.

The lawsuit, filed against some members of the board and executive officers of THQ, alleges that the company manipulated the prices of executive and director stock option grants in violation of the its own internal documents and federal laws governing securities and taxation.

The suit has been filed by New York law firm Stull, Stull & Brody, which is going after a number of companies investigating their stock option grant practices. The law firm has said it also has begun "investigating" Millennium Pharmaceuticals(MLNM Quote), Adobe Systems(ADBE Quote) and Macrovision(MVSN Quote), all of which had disclosed internal investigations over stock options practices.

An internal inquiry by Macrovision found no evidence of fraud and a Securities and Exchange Commission inquiry was terminated with no enforcement action recommended.

Aaron Brody, one of the lawyers involved in the THQ lawsuit, and THQ did not respond to immediate requests for a comment.

"The practice results in lower payments to companies, results in those companies under-reporting compensation expenses, and permits directors, officers and/or executives to unjustifiably reap millions and billions of dollars which should be disgorged and returned to the corporate coffers thereby contributing to the financial health of the company," the law firm said in a statement.

THQ has been investigating its stock options grant practices after an informal inquiry from the Securities and Exchange Commission in August.

Shares of THQ were up 19 cents, or 0.6%, to $31.06.

Other game publishers including Activision(ATVI Quote) and Take-Two Interactive(TTWO Quote) are also investigating their stock option grant practices. Both companies also face shareholder lawsuits over the issue.