Activision sued by shareholders

News - New class action launched

A rather large case against global publishing powerhouse Activision has been launched stateside today by a law firm representing a group of the PLC's shareholders. The action alleges that a number of the top executives at Activision, as well as other employees, issued false statements to facilitate insider dealing - quite a serious accusation, given the high profile accounting irregularities in the spotlight of late.

The case is representing shareholders who purchased stock between February 1st 2001 and December 17th 2002, and implies that company insiders made deliberately misleading statements about the firm's success and prospects with the aim of inflating share prices to allow them to sell at a large profit.

During the period stated, Activision revised forecasts down to $362 million from the previous forecast of $435 million. CEO Robert Kotick, CFO William Chardavoyne and Publishing president and CEO Ron Doornink, as well as eight others, are accused of making a collective $483 million by selling stock during this period. A wide range of allegations are made in the suit, including the shipping of products to retailers in the knowledge they would be returned, and that revenues were improperly recorded.

All in all, the shareholders believe that an artificial image of far-reaching success was presented to the stock market, in breach of GAAP and SEC regulations. Whether this case will proceed or simply fall by the wayside like many 'class actions' in the USA remains to be seen, we'll keep track of any developments for you.