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Lawyers chase Electronic Arts
Complaint filed in federal district court seeks to pin responsibility for last week's drop in share price on corporate officers.
A Philadelphia law firm that makes claims of being "a driving force behind corporate governance reform," as well as being a firm that "has recovered in excess of a billion dollars on behalf of institutional and high net worth individual investors," is seeking relief on behalf of those Electronic Arts shareholders it feels have been harmed by actions taken by the publisher's corporate officers. The actions, say attorneys with Schiffrin and Barroway, led to the drop in value of EA shares last week.
The law firm is hoping to represent investors in a class action lawsuit, which it says it recently filed in US District Court Northern District of California.
In a statement issued by the law firm, attorneys say the complaint "alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that increased competition from its competitors was eroding EA market share; (2) that hardware shortages were material; (3) that EA continued to suffer from operating margin compression; and (4) that as a result of the above, the Company's statements about its financial performance were lacking in any reasonable basis when made."
According to the law firm, the complaint charges Electronic Arts' CEO, Larry Probst, and CFO, Warren Jenson, with violations of the Securities Exchange Act of 1934.
The statement continues by stating that on March 21, 2005, "after the market closed, EA announced revised estimates for the Company's fiscal year ending March 31, 2005" and that "news of this shocked the market."
The following day, shares of the publisher fell $11.20 per share, or 16.88 percent.
When contacted, an Electronic Arts spokesperson said the company does not comment on pending litigation.
Never in my wildest dreams did I believe Electronic Arts would stoop this low, weve found our gaming Enron folks!