More Electronic Arts troubles.

Kobra · Post by **Kobra** » Tue Mar 29, 2005 2:02 pm

http://www.gamespot.com/news/2005/03/28 ... 21194.html

Complaint filed in federal district court seeks to pin responsibility for last week's drop in share price on corporate officers.

ChrisGwinn · Post by **ChrisGwinn** » Tue Mar 29, 2005 3:50 pm

Hardly trouble. I've never heard of a publicly-traded company that doesn't get hit with random shareholder lawsuits.

Kobra · Post by **Kobra** » Thu Mar 31, 2005 9:25 pm

ChrisGwinn wrote:Hardly trouble. I've never heard of a publicly-traded company that doesn't get hit with random shareholder lawsuits.

No, but the lack of open and honest financial reporting by EA at the least, means this is the beginning of some trouble.

However, when you combine the irregularities in reporting, with a massive burst of selling by top EA exectives, then what you have my friends, is a company "Cooking the Books".

Burst of selling by EA executives
http://www.siliconvalley.com/mld/mercur ... 012030.htm

But note how they bought them LOW just before the report, then sold them the same day, making millions after the report. Then of course the market correction we just saw for them recently - of course most of the execs got their cut out of it before this.

EA is dirty as hell.

Jeff V · Post by **Jeff V** » Thu Mar 31, 2005 10:02 pm

Read the article again. They were exercising stock options, which is completely legal. The reason stock options are an attractive form of deferred compensation is because they can be worth a hell of a lot more in the future.

About 18 months ago, the consulting company I was working for offered stock options in the form of employee stock purchase. I put a small percentage of my paycheck into purchasing this stock. Today, the stock is worth roughly 4x what I paid for it. Am I dirty too? Even though I still own the stock, I could have very well have sold it the moment of actual purchase for a substantial gain. That is how stock options work.

Kobra · Post by **Kobra** » Thu Mar 31, 2005 10:49 pm

The timing is obvious what smells. They had 3 days to exercise their options, when the 3 days were up, the stocks went through the roof because of some "News" about the company. Of course, everyone unloaded them.

As far as options, most people at least try to exercise them throughout the year so they don't appear suspicious when the time comes to cheat - like what happened here. Obviously, the recent large slump in EA shares after the correction - puts even more credibility into the insider trading accusation camp.

Martha Stewart gets locked up for 40K, and EA slugs turn millions on the backs of their shareholders and walk the streets unharmed.. Gotta love this country!

ChrisGwinn · Post by **ChrisGwinn** » Thu Mar 31, 2005 10:52 pm

It could also be an employee stock purchase plan, especially if a bunch of them bought and sold at the same time. Frequently those are set up for automatic immediate group sales, and you generally buy at a discount.

Kobra · Post by **Kobra** » Thu Mar 31, 2005 10:56 pm

Thats quite possible.

However a huge purchase plan in a 3 day window, with a big financial statement on the 4th day, sounds like an illegal cash grab to me. I suspect more will be discovered soon enough.

Knowning EA, the people at EA, and how EA does business and treats their developers, I suspect every piece of dirt i've heard will show true.