More legal trouble for 'GTA' maker

In the latest legal salvo against Take-Two Interactive Software, publisher of the best-selling but controversial Grand Theft Auto videogames, two law firms have sued the company on behalf of Take-Two shareholders.

The firms, Milberg Weiss and Stull, Stull & Brody, announced the suits seeking class action status this week. The actions come on the heels of similar suits filed in recent weeks.

Each of the firms is looking for people who owned Take-Two shares between 25 October 2004, the launch of Grand Theft Auto: San Andreas, and 27 January 2006, the day that Los Angeles' city attorney sued Take-Two for selling pornographic videogames to children.

A Take-Two spokesman declined to comment.

In July, the US videogames ratings board slapped a restrictive 'Adults Only 18+' rating on Grand Theft Auto: San Andreas after it was found the company did not disclose an explicit sex scene known as 'Hot Coffee'. The scene was included in the game, but could only be unlocked with a computer download.

The rating change from 'Mature 17+' forced Take-Two to pull the game from store shelves, crimping sales, disrupting company operations and sending Take-Two shares lower.

The change led to a investigation by the Federal Trade Commission. The company also recently disclosed it found material weaknesses in its accounting.

A company director, who was Take-Two's audit committee chairwoman, resigned in January, citing the Hot Coffee debacle and the subsequent FTC probe, various Securities and Exchange Commission inquiries directed at Take-Two and its employees, and management's failure to keep the board informed of key issues.

Milberg Weiss, one of the most prominent class action law firms in the US, said in a press release on Monday that Take-Two engaged in fraudulent and illegal conduct during the class period so that insiders could sell more than 661,000 shares for proceeds of more than $18m.

Take-Two shares, which lost 30 per cent of their value in the time frame outlined in the law suits, were trading up 15 cents to $15.23 on the Nasdaq on Wednesday.

Story Copyright © 2006 Reuters Limited. All rights reserved.