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SEC Begins Probe Into Activision's Options Practices: Filing

Reuters
Friday, 8 Jun 2007 | 1:23 PM ET

U.S. regulators have begun a formal probe into stock option practices at Activision, the No. 2 U.S. video game publisher, according to a company filing.

Activision, whose hit titles includes "Guitar Hero 2" and "Spider-Man 3," learned this month that the Securities and Exchange Commission had issued a formal order of nonpublic investigation, which allows the agency to subpoena witnesses and require the production of documents, according to the filing on Thursday.

The Santa Monica, California-based company said it was cooperating with the investigation, and its representatives had met with SEC staff on several occasions.

A representative of the U.S. Department of Justice has attended some of these meetings and requested copies of documents, Activision said.

Activision shares were recently trading higher.

Last month, Activision posted a loss for the fourth quarter ended on March 31 and gave a first-quarter profit forecast that lagged expectations due mainly to acquisition costs and legal fees from its investigation into stock option accounting practices.

In March, Activision said an internal review of its stock options grant practices had cleared Chief Executive Robert Kotick and three other top executives and board members of intentional wrongdoing.

Activision is among more than 170 companies involved in internal or federal regulatory or criminal investigations into manipulations of stock option grants to lock in gains.

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