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SEC Launches Take-Two Investigation

Hemos posted more than 8 years ago | from the hey-don't-belittle-paste dept.

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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hmm... (-1, Redundant)

Kuxman (876286) | more than 8 years ago | (#15691486)

Is the answer 42?

Re:hmm... (1)

Tebriel (192168) | more than 8 years ago | (#15691493)

No

Re:hmm... (0)

Anonymous Coward | more than 8 years ago | (#15691509)

But that's what the smart kid sitting in front of me had for the answer!

Re:hmm... (1)

z-kungfu (255628) | more than 8 years ago | (#15691502)

at least....

Informal, eh? (5, Funny)

tygerstripes (832644) | more than 8 years ago | (#15691501)

"It's okay folks, this is just an informal investigation (tm) so just, you know... go about your usual illegal activities, or whatever. Just pretend I'm not here."

Hey, gamers! (-1, Flamebait)

Anonymous Coward | more than 8 years ago | (#15691510)

Strafe does not [reference.com] mean the same thing as sidestep. We at Wikipedia would appreciate [wikipedia.org] any insight you can offer as to the origins of your illiteracy.

Re:Hey, gamers! (2, Funny)

Anonymous Coward | more than 8 years ago | (#15691753)

Err...maybe you should quit pasting that long enough to reread the wiki entry you linked.

Re:Hey, gamers! (0)

Anonymous Coward | more than 8 years ago | (#15692910)

Strafe does not mean the same thing as sidestep.

It does now. Welcome to the wonderful world of linguistic change.

Hey, doctors! Treacle does NOT mean the same thing as syrup! Everyone who uses "treacle" in any sense other than its original meaning of "snakebite serum" is illiterate!!!!111lol stfu

Re:Informal, eh? (1)

Bemopolis (698691) | more than 8 years ago | (#15692144)

The SEC equivalent of "Take-Two and call me in the morning. Or maybe we'll call you."

Does anyone have more info? (5, Funny)

192939495969798999 (58312) | more than 8 years ago | (#15691505)

The "article" doesn't say hardly anything about what the news is. Does anyone have a link with some details, like what kinda stock-granting issues are alleged? I initially felt bad for doodling on my Take-Two stock certificates, but they're probably worth more as artwork now...

Re:Does anyone have more info? (2, Interesting)

bfizzle (836992) | more than 8 years ago | (#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

Re:Does anyone have more info? (3, Interesting)

Anonymous Coward | more than 8 years ago | (#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 http://www.thesanitycheck.com/ [thesanitycheck.com] , http://www.faulkingtruth.com/ [faulkingtruth.com] and http://www.investigatethesec.com/ [investigatethesec.com] .

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.

Re:Does anyone have more info? (2, Informative)

shotfeel (235240) | more than 8 years ago | (#15692642)

As bfizzle notes, just about every other company is being investigated, and those that aren't being investigated are doing some scrambling to investigate themselves.

The reason is a study [uiowa.edu] published by Eirk Lie. The short story is he found that executives in many companies "happened" to receive stock options dated to the most recent low in the stock price. This "happened" at a much higher rate than dictated by chance alone. IOW it looked like many companies were backdating the date the options were granted to favor the grantee -which may be a violation depending on whatever rules the company has in place regulating such things. Lie's study showed this may be a very widely used method of granting options -thus many company's are being investigated.

Re:Does anyone have more info? (2, Informative)

j-turkey (187775) | more than 8 years ago | (#15694060)

The short story is he found that executives in many companies "happened" to receive stock options dated to the most recent low in the stock price.

Wow, that's a loaded statement -- do you have a specific dislike for executives?

From your comment, it appears that you don't understand much about how stock options work. Check out this Wikipedia article [wikipedia.org] . It explains a little bit about how strike price (or excercise price) works. In fact, most companies issue stock options at a strike price; these are not just offered to executives, but to employees too. This is especially nice when options mature over a number of years. Stock options are supposed to be a benefit to the employee (including executives). If the company gains value, employees can get in and excercise their options at the lower (strike) price that they were initially offered to the employee at. There is nothing illegal, dirty, or immoral about this practice -- just as long as the company bi-laws do not prohibit the practice.

Offering stock options at a specific strike price has been going on for a long, long time. (much) More often than not, this is not illegal or shady.

Re:Does anyone have more info? (2, Informative)

shotfeel (235240) | more than 8 years ago | (#15698949)

Wow, that's a loaded statement -- do you have a specific dislike for executives?

No, right or wrong that's just where most of the press seems to be focused. You're right that its an issue with anyone who receives stock options, or more specifically with any company that uses them for compensation.

More often than not, this is not illegal or shady.

As the article I linked stated, there is nothing wrong with it, as long as certain procedures are followed. Most notabley, everyone involved needs to be informed up-front that this is the way the company is doing it. Many of the informal SEC investigations are simply asking to see documentation that shareholders were properly informed and financial statements properly accounted for the issue. AFAIK, if that's done, the investigation is over.

I don't know. . . (0, Troll)

AcidLacedPenguiN (835552) | more than 8 years ago | (#15691511)

I don't know, but I'm sure that as long as they're turning teenager's brains into worthless paste they'll be in the clear.

Re:I don't know. . . (0, Flamebait)

Skye16 (685048) | more than 8 years ago | (#15691525)

They're teenagers. Their brains are already worthless paste.

Tag (0)

Anonymous Coward | more than 8 years ago | (#15691518)

The taggers are definitely getting cynical when an article about a grand jury inqury and an SEC investigation is tagged as "games".

Umm, Editor? (1)

Primis (71749) | more than 8 years ago | (#15691521)

Errr... "publically"? And "trade" when "traded" is meant?

This needed cleaning up before posting

Re:Umm, Editor? (0)

Anonymous Coward | more than 8 years ago | (#15691972)

Webster's Dictionary [m-w.com]

And I quote:

publicly
One entry found for publicly. ...
Variant(s): also publically

One in a long line... (3, Informative)

Boone^ (151057) | more than 8 years ago | (#15691529)

Score another one for http://www.sarbanes-oxley.com/ [sarbanes-oxley.com] . EETimes.com has been keeping a count of other companies in hot water for back-dating stock option grants at http://www.eetimes.com/scandal.html [eetimes.com]

Re:One in a long line... (2, Interesting)

mabhatter654 (561290) | more than 8 years ago | (#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.

Average Joe's Survival (0)

Anonymous Coward | more than 8 years ago | (#15691582)

The sad thing is that with legal fees, it is almost impossible for average Joe to survive after something like this. ---- GREPGROK! [grepgrok.com]

Re:Average Joe's Survival (1)

meteau (101450) | more than 8 years ago | (#15691597)

Good point, my question is can this "average joe" get help from some sort of legal aid?

ttwo (1)

ZivZoolander (964472) | more than 8 years ago | (#15691583)

gotta love those sell shorts just before a story like this becomes public. I have been a long time follower of ttwo on the exchange since as far back as i can remember. Why have i been na avid trader and whatch htis one so close. simple,i am calm and can wait untill i know when DNF is ready to come. I hate to say it but the numbers are not looking good for them right now. I hate to say it but TTWO may get radioactive stat and no one will go near them, even if they did wrong or not. Will this effect the Duke in any way, i hate to say it but i think it is goign to have some effect. either this will push it (which i doubt george B and the gang will cave into such demand from there publishers. I have followd those guys at 3drealms for long time and i doubt thell cave in just ot help there publisher. will this mean duke will be released under a different publisher, it might be possible. this wouldnt be the first time duke has changed schedualed publishers (god games for example. Will i be wrong, i admit i am human, I admit i dont work for either compainys. question here is what would you do, if you worked for take two now think what you would do if you worked for 3drealms, now think what you would do if you where neather and you traded ttwo stock?

Re:ttwo (0)

Anonymous Coward | more than 8 years ago | (#15691738)

So it's true.. squinting at stock tickers all day does screw with your spelling.

Re:ttwo (0, Flamebait)

infosec_spaz (968690) | more than 8 years ago | (#15691759)

WOW!! You must not have used the "Preview" button on that post!

Re:ttwo (1)

ZivZoolander (964472) | more than 8 years ago | (#15692020)

guilty, in a rush, boss dosnt understand the need for me to read /.

Re:ttwo (2, Funny)

Lothsahn (221388) | more than 8 years ago | (#15691990)

Maybe you should apply to be an editor of Slashdot...

"informal"? (3, Insightful)

Iphtashu Fitz (263795) | more than 8 years ago | (#15691611)

Since when does the SEC launch "informal" investigations, and more importantly, since when does the SEC acknowledge that they're investigating any company? The SEC is a bit like the Spanish Inquisition [mit.edu] (NOBODY expects the Spanish Inquisition!), in that you don't know they're investigating you until they come knocking on your door with subpoenas and start carting aways boxes full of corporate financial documents.

Re:"informal"? (0)

Anonymous Coward | more than 8 years ago | (#15691859)

Perhaps there close friends of the Bush Family ?

Re:"informal"? (2, Funny)

DerekLyons (302214) | more than 8 years ago | (#15692132)

Since when does the SEC launch "informal" investigations, and more importantly, since when does the SEC acknowledge that they're investigating any company?

Since roughly about .025 seconds after the ink dried on the legislation creating the SEC.
 
 
The SEC is a bit like the Spanish Inquisition (NOBODY expects the Spanish Inquisition!), in that you don't know they're investigating you until they come knocking on your door with subpoenas and start carting aways boxes full of corporate financial documents.

I don't know where you got that impression - as it certainly isn't supported if you regularly follow business news.

No Big Deal (5, Insightful)

jjohnson (62583) | more than 8 years ago | (#15691614)

The SEC has launched a very wide ranging inquiry that's touching virtually every major tech company from the 90s. The issue is the backdating of stock options to the stock's lowest price in the period, and how that was accounted for financially. It's not clear what's been done wrong by anyone, and looks like some fairly technical accounting issues will result in some fines for improper handling of the charges. Regardless, this is cleanup of the wild west 90s, when everyone was handing out options like candy. It says nothing about Take Two that it doesn't likewise say about every dot com.

Re:No Big Deal (1)

Churla (936633) | more than 8 years ago | (#15691661)

The converse of this would be some companies that have employees holding thousands upon thousands of completely worthless stock options. Then of course the company boggles as to why giving them more is not working as an incentive. This company looks to have been trying to keep people by finding a way to turn worthless options into something with value. Good for employees, but bad if you don't handle the accounting right. And trying to make it so that it doesn't actually cost the company anything, but the employee can sell the stock for more, that's not "right".

The addage of the post boom world is... "If I'm worth something pay me, in cash.. now."

Re:No Big Deal (1)

kabocox (199019) | more than 8 years ago | (#15691814)

Regardless, this is cleanup of the wild west 90s, when everyone was handing out options like candy. It says nothing about Take Two that it doesn't likewise say about every dot com.

I just had this mental image of the frontier town becoming "civilized" and having the new terrors of bankers, lawyers, and "the government" to fear instead of just frontier life. I'd guess that 70%-80% of all businesses started end in failure reguardless of time period. I'm going to say that it takes a good 5 years of both profit, success, hiring alot of labors before the government in any form starts to notice. Less than 5 years and your business could go bankrupt, and it wouldn't be worth the effort for going after you. ;)

Re:No Big Deal (1, Informative)

Anonymous Coward | more than 8 years ago | (#15692198)

The issue isn't the backdating of stock options, that is perfectly legal. The issue is the cover up, the companies never notified stock holders that the back dating occured. If the companies would have notified stock holders that they gave options to employees (primarily senior mgmt) which were back dated to optimal pricing (just prior to a major pricing move) then they would not be in legal jeopardy. However, the boards who represented the stock holders and approved the back dating would have been in another kind of jeopardy.

How many? (1, Funny)

Anonymous Coward | more than 8 years ago | (#15691617)

Kids: Mr Owl, Just how many investigations can a publically trade company handle before their stock turns to worthless paste?

Owl: Lets find out.
One, *lick*
Two, *lick*
Three, *CRUNCH*.
Three.

Thoughtful investing? (2, Interesting)

The Living Fractal (162153) | more than 8 years ago | (#15691636)

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?

TLF

Re:Thoughtful investing? (3, Informative)

badasscat (563442) | more than 8 years ago | (#15692304)

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.

It all goes back to the golden rule of investing, which is you buy stock based on the company, not based on the stock.

If a company was hiding serious financial problems, serious investors would have known about it long ago and dumped the stock. It's really difficult to hide financial problems that are so bad that they actually adversely affect the long-term viability of a company. Companies can and do put spin on their financial results all the time, but to actually mis-state what would have to amount to billions of dollars worth of results would be pretty unthinkable. (It's happened in some high-profile cases, but it's hardly the norm.)

In fact, TTWO *did* mis-state quite a bit of revenue a few years back, and they got caught and had to re-state. And it was a decent chunk of change, but it wasn't enough to affect the company going forward, so they took a bit of a hit and went on. Their stock was at 7 at that time but ultimately hit something like 31. If you were an investor who actually *bought* on the day they admitted wrongdoing, you would have come out nicely ahead.

The reason being, of course, that fundamentally the company was still putting out good products that people were interested in buying. If, on the other hand, you knew that TTWO's games weren't selling - if Vice City had only sold 1 million copies, for example, and San Andreas only 500,000 - but they *still* were claiming record profits, then you would start to ask questions. But the bottom line is it's not the result of any *investigation* that should cause a stock to go up or down, it's what that investigation reveals about the company itself. You need to look beyond the superficialities.

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.

In other words, buy high, sell low, huh? That's not really a winning strategy.

Good investors would have bought TTWO's stock after the negative results of the previous investigation, when everybody else was selling. Those people made out like bandits later on.

A smart strategy, if you're a stock holder that still truly believes in a company after all these investigations, is to simply buy more stock when it drops. This way, you average your costs - if you bought your first stock at 12, and it drops to 8, you can buy enough that your average cost was 10. You'll make more money later, provided the company itself continues to do well.

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?

Yes, and it's illegal. And since everybody has to report their buys and sells, it's not really possible to get away with it under obvious conditions like this.

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.

What constitutional rights would those be? So the government is not allowed to investigate anybody because some stupid idiot shareholders decide to sell the first wind of it they get?

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

Again, in what way is it damaging? Is this investigation into TTWO in any way affecting their ability to create creative and fun games?

Companies do not exist to sell stock. Companies exist to sell products and/or services. I don't see how any investigation by the SEC is going to affect your average gamer's desire to go down and purchase a copy of Grand Theft Auto: Liberty City Stories.

It seems like your questions are more relating to how stockholders can protect themselves. And the answer is to stop buying and selling stocks based on speculation and start buying and *holding* stocks based on solid company fundamentals.

Re:Thoughtful investing? (1)

gatesvp (957062) | more than 8 years ago | (#15693974)

I've got no karma points, so thank you for providing such a thorough answer.

Re:Thoughtful investing? (1)

The Living Fractal (162153) | more than 8 years ago | (#15694641)

Excellent response. I am glad you took the time to write it.

TLF

The EFF May Want to Get Involved (1, Offtopic)

ewhac (5844) | more than 8 years ago | (#15691649)

This is a maliciously motivated, willful misunderstanding of how software development is performed. The "offensive" data was disconnected from the main game, but not fully removed. The reason it wasn't removed is because, when you're that close to a drop-dead ship date, you don't suddenly start yanking out huge wads of data and code because that will invalidate all your testing to date, and you'll have to re-test the entire damned game, which you don't have time for. So they did the next best thing -- they severed all the connections to it. In the annals of software engineering, this is considered, "good enough." And it's more than good enough for the likes of these pencil-pushing bureaucrats.

This is government harassment, pure and simple.

Schwab

Has nothing to do with the grandjury investigation (1)

everphilski (877346) | more than 8 years ago | (#15691696)

SEC is just concerned that you dot your i's and cross your t's with financial paperwork. Really, RTFA.

Re:The EFF May Want to Get Involved (1)

kinglink (195330) | more than 8 years ago | (#15691736)

So instead of having a simple couple lines of code to include it back into the game, you obscure it to the point you can't access it. If you really want, you scrable the files themselves to the point you can't get them back.

And what ever you do, you don't have an employee leak the code to get it back into the game. There's numerous games when certain stuff was taken out because of ESRB issues. The company I worked at has done it a couple times, not because they felt it was wrong, but because of a ESRB issue of rating.

However instead of just taking it out as a console command or such (which they did in the demo, and it was figured out when the demo was released) they took it out again, removed the console command, and then scambled the whole code to make it work, then released the game. That "over violent" scenes have yet to be cracked publicly.

If it was an inside job, then nothing Rockstar was going to do was going to save them this heartache. If someone outside the company figured it out then Rockstar needed to do more.

This is like saying I should be allowed to own a gun, have the bullets next to the gun but not be in the gun and be considered "safe". No, you put the bullets in another location, or you lock the gun and bullets into a safe which only people over the age of 18 know, and you keep the safe locked and away from your kids and your kid isn't going to shoot someone or themselves.

I'm not blaming Rockstar, but Rockstar left the code in the game in a way that either was leaked or figured out, either way that's Rockstar's or Rockstar's employee's fault.

Re:The EFF May Want to Get Involved (0)

Anonymous Coward | more than 8 years ago | (#15692021)

So they did the next best thing -- they severed all the connections to it. In the annals of software engineering, this is considered, "good enough."

Err, the point you're missing is that the bigger issue here is not what was done, but the nature of the data it was being done to. What you say is true, you get late in the dev cycle and you try to keep things as stable as possible by minimizing change. No prob there. However, let's say you were delivering a database app with a sample database and you realized that your sample had all your employees personal information in it (let's say you were using the db internally). Now, would you say "screw it, let's just not provide a direct way to get to it and ship it anyway"? Probably not. If you're a defense contractor and you realized that you had put classified information in the release, again, do you say "security by obscurity is good enough", no, in this case it's not good enough. Now, I'm not saying that the contents in this case rate the same as above, I'm only bringing up the point that it really depends on what the nature of the change is, you can't just simply make a blanket statement and say that it's good/smart development practice. There are times when you just have to let the date slip and make your changes.

Re:The EFF May Want to Get Involved (1)

fermion (181285) | more than 8 years ago | (#15692044)

Which has nothing to do with the current SEC investigation, which involves stock fraud. It wasn't called stock fraud back then, it was just a nify way for board members to funnel cash to the executives without the direct knowledge of the shareholders. The biggest problem was that the practice undermined the explicit goal of stock options, which was to link the success of the compnay to the payment of the executive. Not a big deal, the people in charge lie to investors all the time, especially when those investors are also the employees.

OTOH, this might have something to do with situation. On the software side game developers hide code that will not make it throught the ratings, hoping that they can hide behind due diligence. When the code is discovered, instead of taking responsibility, they run and hide. Remember, a lot of white collar folks would have been fine if they continued to follow procedures and fully admitted thier actions.

I hope the EFF does not take actions, unless it is on the side of abused game developers, who according to reports are underpaid and overworked, all so their bosses can get unauthorized bonuses.

Re:The EFF May Want to Get Involved (1)

Borland (123542) | more than 8 years ago | (#15692074)

Now I've seen off-topic replies and generated a few of them myself. But to confuse a SEC stock investigation with an unrelated ESRB issue? However, I'm generous, so let's doctor this post up with a reed thin connector:

This is a maliciously motivated attempt by the SEC to prosecute a company based on a rabid assault from the Religeous Right. This theocractic government, not content with ESRB guidelines and FCC fines is going beyond the pale by trying to collapse the stock price even further. I think the EFF needs to get involved to defend our liberties!

See, it's not hard to construct on-topic argument based on personal bias.

Re:The EFF May Want to Get Involved (1)

DerekLyons (302214) | more than 8 years ago | (#15692116)

This is a maliciously motivated, willful misunderstanding of how software development is performed. The "offensive" data was disconnected from the main game, but not fully removed. The reason it wasn't removed is because, when you're that close to a drop-dead ship date, you don't suddenly start yanking out huge wads of data and code because that will invalidate all your testing to date, and you'll have to re-test the entire damned game, which you don't have time for.

Which of course raises the question - if the code was not intended to be in the game (Take-Two had to know it exceeded their target rating), what was it doing commited to the main branch in the first place?
 
 
So they did the next best thing -- they severed all the connections to it. In the annals of software engineering, this is considered, "good enough."

If there truly were no connections to it - it could have safely been removed *without* retesting. (And that what Take-Two did is considered "good enough" - then it shows just how shoddy development practices in software engineering really is.)
 
The facts of the matter don't support any other conclusions than Take-Two (which encouraged mods), knowingly left that code in place for modders to find.

Re:The EFF May Want to Get Involved (1)

Fulcrum of Evil (560260) | more than 8 years ago | (#15692620)

Which of course raises the question - if the code was not intended to be in the game (Take-Two had to know it exceeded their target rating), what was it doing commited to the main branch in the first place?

Easter egg? Rogue developer? Shit happens.

If there truly were no connections to it - it could have safely been removed *without* retesting.

And if you could know something like that, you wouldn't need testing, now would you?

The facts of the matter don't support any other conclusions than Take-Two (which encouraged mods), knowingly left that code in place for modders to find.

So what? The ESRB should rate games as shipped, not based on what someone could do with them - HL2 can be modded into gothic horror, so should it be MA?

Re:The EFF May Want to Get Involved (1)

poot_rootbeer (188613) | more than 8 years ago | (#15692182)


Did you maybe mean to post your comment to a different story about Take-Two? I don't see anything in the story suggesting that the SEC investigation is in any way related to the presence of the "Hot Coffee" code on the media GTA was shipped on.

To address your semi-OT point, I understand why Take Two didn't excise the code completely, but I also think they could have saved themselves a lot of trouble when they submitted the game to the ESRB for review. If they had said "early revisions of this game included a sex simulation, which has since been removed, and testing proves this content is inaccessible to the user in the game's current state", they would have had a better defense against allegations that they intended for gamers to find it, and intentionally subverted the ratings board.

And if they couldn't prove that the content was inaccessible, they deserve everything they got as a result.

It's actually a big problem apparantly (1)

Sycraft-fu (314770) | more than 8 years ago | (#15692231)

That being unused assets making games larger than they need to be. This is one of the thigns MS claims the Xbox 360 dev kit helps with. It supposedly helps you track down these unused assets so you can remove them from your game and get more space for ones that you are using on the DVD. Normally they just don't get the press that this one did.

You can see it in other games though. In Civ 4 there's mods that enable so called "lost wonders" they have videos and everything. Basically, Firaxis decided to produce all the content needed for these, but for various reasons decided not ot use them in the final game. They then just left the assets on the DVD (they weren't short on space). They probably could have even removed them without much testing, given the highly modular nature of the game, but it just wasn't worth it. Gave modders something to tool around with at any rate.

Re:The EFF May Want to Get Involved (1)

DrXym (126579) | more than 8 years ago | (#15692747)

Whether it was left in or not, the offensive material was so innocuous, that a 15 rated movie could exceed what is shown in "Hot Coffee".

Investors had a right to know about HotCoffee. (1)

AHumbleOpinion (546848) | more than 8 years ago | (#15695102)

This is a maliciously motivated, willful misunderstanding of how software development is performed ... This is government harassment, pure and simple.

You are seriously mistaken, the rules are very different when you are putting your investor's money at risk. A company is legally required to inform investors of risks. Leaving content in a game that may result in product recalls, remastering and replacements, lawsuits, etc may be the sort of thing that investors have a right to know about. Having the SEC look into this seems very reasonable.

The "offensive" data was disconnected from the main game, but not fully removed. The reason it wasn't removed is because, when you're that close to a drop-dead ship date, you don't suddenly start yanking out huge wads of data and code because that will invalidate all your testing to date, and you'll have to re-test the entire damned game, which you don't have time for. So they did the next best thing -- they severed all the connections to it. In the annals of software engineering, this is considered, "good enough." And it's more than good enough for the likes of these pencil-pushing bureaucrats.

All owners know that when they take their company public there will be a huge increase in regulations and paperwork, and changes in day-to-day business practices. If you want to take investor's money, you have to accept the former. When management makes decisions like those you describe they are legally required to consider the potential impact on investors.

how many? (3, Funny)

revlayle (964221) | more than 8 years ago | (#15691657)

"Just how many investigations can a publically trade company handle before their stock turns to worthless paste?"

One... two... *CRASH* three

It's three

Re:how many? (1)

kesuki (321456) | more than 8 years ago | (#15692498)

thanks for the laugh :)

Re:how many? (2, Insightful)

pimpimpim (811140) | more than 8 years ago | (#15695237)

you know, I get the impression that in this case someone's really trying to spread FUD over this company. At least starting lots of investigations against it, at the same time, so the outcome becomes even more uncertain. Say, if they would have done this after the first one ended succesfully, then stockholders would be more secure about the outcome of the next one. But now, the uncertainity that they will survive all this is big, making people fear about their stock, and doubt about the feature. Seems like all ingredients are there to kill off Take Two even without any real arguments to be found.

Obligatory (0)

Anonymous Coward | more than 8 years ago | (#15691691)

Mmm, paste... *drool*

How many... (1)

Embedded Geek (532893) | more than 8 years ago | (#15691756)

Just how many investigations can a publically trade company handle before their stock turns to worthless paste?

Um, 42?

Re:How many... (1)

Dionysos Taltos (980090) | more than 8 years ago | (#15691873)

That's the answer to a more "universal" question.

Re:How many... (1)

Embedded Geek (532893) | more than 8 years ago | (#15692069)

Like "How many roads must a man travel down?," right?

Re:How many... (1)

Dionysos Taltos (980090) | more than 8 years ago | (#15693397)

LOL ... absolutely!

Grand Jury * (2, Interesting)

Anonymous Coward | more than 8 years ago | (#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.

If Only... (2, Interesting)

Kurt Wall (677000) | more than 8 years ago | (#15692376)

...the SEC would target SCO's "interesting" stock option arrangements.

# of investigations != importance (1)

smellsofbikes (890263) | more than 8 years ago | (#15692419)

>Just how many investigations can a publically trade company handle before their stock turns to worthless paste?

Gee, I dunno, let's ask Microsoft or IBM.

If a company is financially strong, they'll shrug off investigations *even if* the allegations are found to be true. It's only when companies are already tottering, that investigations can make investors lose confidence.

Just Desserts (1)

GalacticCmdr (944723) | more than 8 years ago | (#15692510)

For releasing Battlecruise 3000 AD upon the world - they are reaping what they have sown.

Re:Just Desserts (1)

Mancat (831487) | more than 8 years ago | (#15693318)

Big mistake, you shouldn't have said that. Don't go to sleep tonight, because Derek Smart is gonna be there to suffocate you with your own pillow.

When is Verizon et al going to be investigated (0)

Anonymous Coward | more than 8 years ago | (#15692521)

When are Verizon, Sprint, etc going to be investigated for not
allowing consumers to put their own applications on to their phones?

Re:When is Verizon et al going to be investigated (0)

Anonymous Coward | more than 8 years ago | (#15692618)

1) this would have nothing to do with the SEC

2) if this were truly a problem, some company would solve it and gain additional customers.

3) had you actually paid for a nicer phone instead of a cheapy, you would be able to put your own applications.

i fail to see what your problem is...

Grand Jury Inquiry (3, Funny)

Mr. Underbridge (666784) | more than 8 years ago | (#15692647)

Is that the name of their new game? Do I get to play a lawyer?

And now, another annoying idiot (1)

Garnaralf (595872) | more than 8 years ago | (#15694227)

... will come out of the woodwork. Within 24 hours, Jack Thompson will be screaming about how he's won his battle to utterly destroy Take Two. This won't destroy Take Two. If the SEC finds something, they'll pay a fine. Which means the new Tennis game will cost 50 cents more.

Ouch (1)

dtfinch (661405) | more than 8 years ago | (#15694313)

Could this affect the release of Duke Nukem Forever?

"grand jury inquiry"? bollocks. (0)

Anonymous Coward | more than 8 years ago | (#15698028)

As far as the information noted within the article is concerned, T2I isn't the subject of any such thing. That's a subpoena for records. Any case involving the grand jury can issue a grand jury subpoena for such information if one of the parties so chooses. This doesn't say anything about T2I.

Note that both articles are put out by the same site -- and, gasp, the same journalist. I'd say that the bad press involved might be personal.

Motives? (1)

infidel13 (978594) | more than 8 years ago | (#15709657)

Perhaps someone is trying to turn their stock into worthless paste. I'm sure there are plenty of people in government who would love to be morality police.
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