Risk Management

It’s Liberty City for “Grand Theft Auto” Ex-Counsel

Former general counsel of video game maker Take-Two Interactive gets probation for falsifying stock options records. The sentence comes on the heel...
Stephen TaubAugust 9, 2007

Kenneth I. Selterman, the former general counsel at Take-Two Interactive Software, was sentenced to three years of probation for falsifying business records in connection with the improper backdating of employee stock options. Justice Brenda S. Soloff also sentenced Selterman to 200 hours of community service and a fine of $50,000, according to Bloomberg. These terms were agreed to when Selterman entered his plea back in June.

Selterman is the third former executive from the video game company best known as the maker of the Grand Theft Auto series, to be sentenced for violations tied to the company’s stock option backdating practices. In June, Selterman pled guilty to providing false information in a March 2002 letter to regulators regarding options.

In addition, Patti Tay , the former accounting officer, admitted to making false entries in 2001 and 2002 on a spreadsheet of stock option grants, according to Bloomberg, which cited court records. Also, in February, >Ryan Brant, the founder and former chairman and CEO of Take-Two pleaded guilty to felony charges of falsifying business records in connection with the misdating of stock option grants.

Selterman held the position of General Counsel at Take-Two from 1999 to 2007, when he left the company. His plea related to a letter submitted to the NASDAQ Stock Market Inc. concerning the types of stock options that had been issued to executive officers at Take-Two, according to Manhattan District Attorney Robert M. Morgenthau. NASDAQ rules required that executive officers receive only options granted pursuant to an employee stock option plan.

During the course of the investigation it was discovered that Selterman, in response to a 2002 request by NASDAQ, “deliberately and falsely failed to inform NASDAQ” that certain executive officers had received substantial numbers of “non-plan” options, according to Morgenthau when he announced the plea.

Meanwhile, earlier this week a federal jury convicted former Brocade Communications Systems CEO Gregory Reyes on all 10 felony counts, giving the federal government an opening victory in its war against executives implicated in schemes to backdate stock-option grants.

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