This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

SEC Launches Inquiry of Electronic Arts Options

Updated from 5:19 p.m. EDT

Electronic Arts (ERTS) had some good news and some not-so good news Wednesday about inquiries into its past stock options grants.

The good news: A labor union pension fund voluntarily dismissed a lawsuit it filed against the company last month that had alleged EA used "improprieties" in the way it historically issued options.

But even as that that problem was going away, the company acknowledged another one: The Securities and Exchange Commission has launched an informal inquiry into the video game publisher's options grants going back to 1997.

"EA intends to cooperate with all matters related to this [inquiry]," the company said in a regulatory filing on Wednesday.

Company spokesman Jeff Brown declined to comment further on the lawsuit's dismissal or the SEC inquiry.

Investors seemed to think the bad news outweighed the good. In recent after-hours trading, shares of EA were off 82 cents, or 1.5%, to $55.19.

Regulatory agencies like the SEC are examining the options practices of dozens of companies in addition to EA. The wide-ranging inquiry follows allegations that at numerous companies, officials boosted the value of employee and executive options by underhandedly "backdating" them, assigning to them an exercise price from a date that was known long after the fact to be a short-term low in the stock.

An EA representative said last month that the company had already conducted its own internal inquiry into its past grants and found no evidence of any problems.

According to EA's filing, the Plumbers & Pipefitters Local No. 572 Pension Fund dismissed its suit of its own accord. EA didn't pay the company or its attorneys any compensation to get them to dismiss the suit, the company said.

EA did not say why the pension fund dismissed the suit, and the fund's attorney did not immediately return a call seeking comment.

As for the SEC probe, EA said in its filing it received the inquiry from the agency last Thursday, five days before informing investors about it.

"We filed within the compliance period," Brown said, when asked about the delay.

Shares of EA closed regular trading on Wednesday up $1.71, or 3.2%, to $56.01.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
AAPL $112.34 0.00%
FB $89.89 0.00%
GOOG $614.34 0.00%
TSLA $247.69 0.00%
YHOO $31.77 0.00%


Chart of I:DJI
DOW 16,351.38 +293.03 1.82%
S&P 500 1,948.86 +35.01 1.83%
NASDAQ 4,749.9790 +113.8740 2.46%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs