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SEC Launches Take-Two Investigation 73

crecente writes "Take-Two, already the subject of a Grand Jury inquiry, is now being 'informally investigated' by the Securities and Exchange Commission. This latest investigation looks at stock option grants made by the company from Jan. 1997 to the present. Just how many investigations can a publically traded company handle before their stock turns to worthless paste?"
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SEC Launches Take-Two Investigation

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  • by bfizzle ( 836992 ) on Monday July 10, 2006 @11:47AM (#15691553)
    Doesn't really need to. About every other company is currently being informally investigated for back dated stock options. For the most part investors understand that these inquiries will only lead to previous years finacial data being changed and have little to do with the future outlook of a company.

    Hold on to your doodle pads... take-two will be ok and they might be worth a lil more in the future
  • by Anonymous Coward on Monday July 10, 2006 @11:49AM (#15691576)
    This sort of thing happens all the time. Basically vulnerable companies are targeted by hedge funds who short the shares in the company. Then they work with their cronys among the media and regulators in order to create bad news (SEC investigations being one of them) in order to drive the stock price down.

    This is the battle that Overstock is going through right now. And Krispy Kreme and Vonage and Delta Airlines.

    You can read more about this at [], [] and [].

    By the way, and "informal" investigation technically is where the SEC ask for documents and provides them. They turn "formal" when the SEC issues subpoenas in order to get the information.
  • by The Living Fractal ( 162153 ) <banantarr@hotmail . c om> on Monday July 10, 2006 @11:58AM (#15691636) Homepage
    What pattern should an investor's thought pattern follow in this gray area of the law? Obviously one can surmise that a company under investigation could quite possibly have serious financial problems which they might be hiding, a la Enron et al.

    So does that mean that immediately upon hearing of investigatory action the investor in said company should dump all stock? Say they choose that route. Then the investigation reveals that the company was indeed breaking the law. Then it was a wise choice to dump the stock. But what if the investigation reveals the company wasn't breaking the law? Does the stock then get a noticable, predictable bump? I am seriously asking these questions.

    If the norm is that after a positive result, i.e. no law-breaking was found, the stock does not go up, then the only logical answer is to dump the stock no matter what when the investigation is announced. So in this respect whoever hears about the investigation first gets to lose the least amount of money. Which is to say, probably the company owners and employees. Is that insider trading? Again, I am seriously asking these questions.

    And what of the possbility of a more secretive investigation? Because in this case it certainly seems like the company in question is essentially guilty until proven innocent, and possibly punished before any proof is found. This certainly seems to breach the idea of constitutional rights.

    Is there really any way to make this less damaging to the companies?

  • Grand Jury * (Score:2, Interesting)

    by Anonymous Coward on Monday July 10, 2006 @12:48PM (#15692011)
    Not for nothing, but the Grand Jury will indict just about anything. They look at a case and see it as black and white. The evidence needed for them to pass down an indictment is minimal at best. They look at it as "is there anything?, if yes let the courts figure it out"

    I am pretty sure they could indict a wet paper bag if they felt the need.
  • by mabhatter654 ( 561290 ) on Monday July 10, 2006 @12:54PM (#15692062)
    Actually this is exactly what SOX is supposed to catch... i.e. your CEO is supposed to be following the rules and SOX will tell them they're not. Most of this stuff is pre-SOX anyway, but with SOX in place the management can't hide the accounting adjustment in "creative accounting" like they used to.. As far as back dated stock options, this is typical of how slow govt. works. There was a WSJ article a week or so about the stock option issue. The players that benefited most, M$ and other now-rich tech companies were "nicely asked" years ago to stop this practice all nice an polite-like so they didn't get hit. That's how most of the big tech companies posted such great numbers in the 90's and minted so many millionaires with out breaking payroll or "profits". The players getting "caught" now are just the copycats that followed along because that type of accounting was "industry standard" for so very long. In some ways its a tempest in a teapot, because the company funds are just fine and they are now accounting correctly. In other ways it's "Great Depression" level stuff because investors allowed companies to basically lie about employee compensation for so long that if it all had to be cleaned up at all the companies, at once, the market would crash because so many books are "cooked". Of course the REAL damage is not so much those companies investors, but those who played FAIR when nobody cared and investors overlooked for the big investments because their books were being compared to companies with "cooked" books.
  • If Only... (Score:2, Interesting)

    by Kurt Wall ( 677000 ) on Monday July 10, 2006 @01:40PM (#15692376) Homepage
    ...the SEC would target SCO's "interesting" stock option arrangements.

"We don't care. We don't have to. We're the Phone Company."