Troubles continue to pile up for Take-Two Interactive.
The latest bad news is a class action suit filed this morning in federal court by the City of Flint (MI) and its pension fund. The suit alleges securities fraud and insider stock trading. According to allegations in the suit, Take-Two deceived the city's pension fund as well as other investors, by misrepresenting the assets of the corporation and hiding the financial damage done by the Hot Coffee scandal.
The suit also alleges that while the Flint pension administrators were buying TTWO in hopes of raising the value of its portfolio, insiders dumped $18 million worth of shares based on knowledge that Hot Coffee would cause the stock to tank.
Mayor Don Williamson (left) said, "Fraud against the taxpayers of Flint and our retired Flint police officers and firefighters will not be tolerated. Not only was the city pension fund deceived as to the value of the stock, but the true nature of what this company was selling was being concealed too."
The Associated Press has more on this story, including word that Flint invested $524,000 in TTWO, ultimately taking a $176,000 loss.
"This is the kind of investment you did not want to make," city attorney George Peck told retirement board members Tuesday. "The bottom line is you were deceived."