This excerpt taken from the TTWO 8-K filed Aug 5, 2008.
St. Clair Shores General Employees Retirement System v. Eibeler, et al.
On July 30, 2008, the U.S. District Court for the Southern District of New York (the Court) granted in part and denied in part the motion to dismiss filed by the Special Litigation Committee (the SLC) of the board of directors of Take-Two Interactive Software, Inc. (the Company) in the purported class and derivative action captioned St. Clair Shores General Employees Retirement System v. Eibeler, et al., No. 1:06-cv-00688 (SWK). All claims against the Company were dismissed. The plaintiff asserts that certain defendants breached their fiduciary duties by selling their stock while in possession of certain material non-public information and that the Company violated Section 14(a) and Rule 14a-9 of the Exchange Act by failing to disclose material facts in the Companys 2003, 2004 and 2005 proxy statements in which approval to increase share availability under the 2002 Stock Option Plan was solicited. The plaintiff seeks the return of all profits from the alleged insider trading conducted by the individual defendants who sold the Companys stock, unspecified compensatory damages with interest and its costs in the action.
In its decision, the Court dismissed all claims against all defendants arising out of the plaintiffs derivative claims. The Court found that the SLC was independent and acted in good faith in conducting its investigation of plaintiffs claims. The Court concluded that reasonable bases existed for the SLCs conclusion that the plaintiffs individual claims were without merit and that further pursuing the derivative claims was not in the best interest of the Company or its stockholders.
The Court denied the SLCs motion to dismiss the remainder of the plaintiffs claims which were added after the SLC had concluded its investigation of the allegations contained in the original complaint filed January 30, 2006, on the basis that they were direct claims and thus not subject to the demand requirement and could not be dismissed for failure to make a demand upon the Companys board of directors. In these remaining claims, brought against certain former officers and directors of the Company and not against the Company itself, the plaintiff alleges that material information was omitted from proxy materials between 2001 and 2005 which caused the stockholders to approve additions to the Companys stock option plans and which violated the stockholders voting rights and diluted their ownership rights. The Court expressly did not determine whether these claims would entitle the putative class to monetary damages. We intend to continue to vigorously defend the remainder of the plaintiffs claims.