SEC Settlement Buoys Take-Two Interactive

The fraudulent transactions allowed Take-Two to meet a number of financial targets that triggered "substantial bonuses" for former CEO Ryan Brant, former CFO James David Jr. and former chief operating officer Larry Muller, the SEC said.

Following its own internal investigation, Take-Two restated financial results dating from fiscal 1999 to fiscal 2003. The company proposed a settlement with the SEC in November and had been awaiting word of the agency's decision since then. At the time of its offer, Take-Two set aside the $7.5 million proposed settlement charge.

Brant, whom the SEC said was either aware that Take-Two's financial reports were inflated or was "reckless in not knowing," will pay about $3.6 million to settle the charges against him, including a $500,000 penalty, the return of his bonus and pre-judgment interest. Muller, whom the SEC accused of orchestrating the fraud, will pay $1.7 million to settle the charges against him. David, whom the SEC charged with having knowledge of the fraud, agreed to pay some $993,949.

Robert Blau, Take-Two's vice president of sales, who, according to the SEC, helped arrange some of the fraudulent transactions at Muller's request, agreed to pay $114,508 to settle the charges against him.

The settlement bars Brant and David from serving as directors or officers of any public company for five years and 10 years, respectively. Under the agreement, Muller, whom the SEC said was the "principal architect" of the fraud, will be permanently banned from serving as an officer or director of a public company. Additionally, David, whom the SEC said knew of the fraudulent transactions, will be barred from practicing as an accountant before the SEC for 10 years.

Brant resigned as Take-Two's chairman in March last year and stepped down as the company's CEO in February 2001. Both David and Muller had left the company by February 2002.

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