The SEC's informal investigation of Take-Two Interactive Software, Inc. (NASDAQ: TTWO) has gone formal. This comes after years of controversy surrounding the company including allegations of overstated earnings, options backdating, hidden porn in the company's Grand Theft Auto video game, and the current battle for control of the company. The formal investigation will, according to Herb Greenberg, give the SEC "carte blanche to subpoena anybody and everybody."
Interestingly, the stock didn't respond strongly to the news, perhaps a reflection of the changes in management that have occurred -- the market realizes there were massive governance problems, and expects the new management to clean things up. Still though, given the controversy and need for change, the shares don't look particularly cheap to me.
For more on my take on the situation at Take Two, read this piece from April 2.
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