Take-Two Subpoenaed on Explicit Scenes

Take-Two Interactive Software (TTWO) received grand jury subpoenas from the New York County district attorney requesting production of documents related to the video-game maker's "Hot Coffee" explicit-scene additions.

Following the post-close announcement on Monday, the company's stock plunged $2.52, or 19.6%, to $10.35 on Instinet.

Take-Two acknowledged last July that hidden inside Grand Theft Auto: San Andreas, the latest iteration of its core game franchise, was a mini-game that allowed players to manipulate characters to perform explicit sex acts. Players could access the mini-game by downloading a program dubbed "Hot Coffee" over the Internet.

In response, Take-Two agreed to re-rate the game from "mature" to "adults only," meaning that many stores no longer would carry it. The company took a $24.5 million inventory charge as a result of stores returning the title to the company. Take-Two later re-issued San Andreas without the "Hot Coffee" content and offered a software patch for those who already owned the game.

On Monday, Take-Two said the district attorney was seeking materials related to myriad subjects, including the knowledge of officers and directors regarding the hidden scenes, as well as company information regarding the submission of the game to the ratings board, and other corporate disclosures, including the termination if its auditors.

The company has not been advised that it or any specific individual is presently a target of the investigation.

Take-Two said it is fully cooperating and providing the requested documents.

Two weeks ago, Take-Two settled a Federal Trade Commission investigation into the controversial game. Take-Two promised to better monitor the marketing of future releases.

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