said former CEO Ryan Brant "controlled and dominated" the stock option grant process leading to a pattern of backdating options between April 1997 and August 2003.
Take-Two said that during that period the company failed to comply with its stock option plans and did not maintain adequate control and compliance procedures for option grants, resulting in a "significant" number of options being backdated.
Brant, who served as the company's CEO until Feb. 2001, and as chairman until March 2004, resigned last October.
"The compensation committee abdicated its option granting responsibilities," said Take-Two in a filing with the
Securities and Exchange Commission
Shares of Take-Two were recently down 48 cents, or 2.7%, to $17.01.
Take-Two initiated an investigation of its stock option grant practices from its April 15, 1997, IPO through June 2006.
The investigation by law firm Kasowitz Benson Torres & Friedman, which was retained by Take-Two's special investigation committee, collected over 3 million company emails, reviewed 400,000 of those and conducted interviews with 13 present or former company officers, directors and employees, the company said.
Take-Two also exonerated its present management including CEO Paul Eibeler and CFO Karl Winters and said they did not engage in any misconduct. It has said earlier it will restate historical financial statements to record charges for compensation expenses though it did not disclose an estimate of the impact.