Former Take-Two execs settle SEC complaint

NEW YORK - The Securities and Exchange Commission has settled civil complaints against former executives of video game publisher Take-Two Interactive Software Inc. over stock options backdating.

Kenneth Selterman, Take-Two's former general counsel and controller, agreed to pay $474,300, including a civil penalty, prejudgment interest, as well as restitution, the SEC said.

Patti Tay, the company's former chief accounting officer, agreed to pay a civil penalty of $125,000. Neither admitted or denied the SEC's findings, which alleged that they "enriched themselves and others by knowingly or recklessly" allowing Take-Two's former Chairman and CEO Ryan Brant to backdate Take-Two's stock option grants, the commission said.

Both Tay and Selterman pleaded guilty in a New York state court in 2007 to a misdemeanor charge of falsifying company records in connection with a probe into backdated stock options.

Earlier that year, Brant became the first CEO to be convicted of backdating stock options. He pleaded guilty in a New York state court to felony first-degree falsification of business records. The deal let him avoid prison, but he was ordered to pay $7.2 million restitution.

Take-Two, whose current management took over in early 2007, is one of many companies to be mired in stock options backdating complaints in recent years. The practice involves pegging stock options to favorable grant dates in the past to boost the recipients' award. It is not necessarily illegal, but it must be disclosed to shareholders and properly accounted for.

Earlier this year, Take-Two agreed to settle investigations of its stock option granting practices by the SEC and the New York district attorney. The company agreed to pay $3.3 million without admitting or denying the SEC's allegations. It said at the time that the DA agreed not to prosecute the company for the illegal conduct of its former executives as part of the settlement.

Listed phone numbers for Selterman and Tay could not immediately be located Monday.

Shares of Take-Two, best known for the "Grand Theft Auto" video games, rose 13 cents to $9.65 in afternoon trading.

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