The 2006 suit, which was tentatively settled for $20 million, also alleges that company officers earned more than $18 million in insider trading even as the company's stock plummeted.

"As a result of the disclosures of the Company's true financial condition, its stock ratings have been slashed," the suit, initially filed by John Fenninger who purchased Take-Two common stock, states. "Moreover, the Company is exposed to class action lawsuits and regulatory enforcement actions brought by the Attorney Generals of several states. While the public investors lost over one billion dollars in market capitalization, the Individual Defendants pocketed over $18 million in insider trading proceeds."

Hot Coffee, a bit of hidden sex found behind the apartment doors of the game, was discovered in July 2005 after a modder released a hack for the game that unlocked the previously hidden content.

Earlier today, Take-Two announced that they had reached a settlement in the case, with the company and its insurer paying out more than $20 million.

The nut of the allegations contained in the 34-page suit, is that Take-Two was spending more than it was bringing in and couldn't survive until the next Grand Theft Auto. So, the suit alleges, the company pushed Grand Theft Auto: San Andreas out the door knowing that there was pornographic material in the game because delays would have cost the company too much. If the material was known to be in the, the suit continues, major retailers wouldn't have sold it.

The outcome, according to the suit, was inflated stock prices based on bad or uninformed information from the company and a plunge in stock values when the truth came out.

The suit also alleges that Take-Two lied about the included sex scenes, nicknamed Hot Coffee, when they first came to light, with the company the scenes were "the work of a determined group of hackers who have gone to significant trouble to alter scenes.'"

The suit outlines how the value of Take-Two's stock first rose significantly with the release of the game and then began to plummet as the allegations and suits came to light. The suit connects the two, alleging that the company lied during financial statements to try and cover themselves and later key executives profited from inside information while selling company stock.

It's an interesting read and worth some time if you've been following the Hot Coffee allegations and are interested in a document that ties stock values and company statements to the life-cycle of the controversial sex scene in San Andreas. But do keep in mind that just because the suit was settled, that doesn't mean the contents have been proven or disproven.

Class Action

The class action will be dismissed in exchange for an aggregate payment of $20,115,000 into a settlement fund for the benefit of class members, of which $15,200,000 will be paid by Take-Two's insurance carriers, and $4,915,000 will be paid by Take-Two.

Today's settlement is related to a 2006 consolidated securities class action which included both historical stock option granting practices and the inclusion of a hidden sex scene in the game. It's not tied to an earlier 2005 consumer class action.

"We are pleased to have reached this settlement, which represents another important step forward for the Company," said Strauss Zelnick, Chairman of Take-Two.

Hot Coffee, a bit of hidden sex found behind the apartment doors of the game, was discovered July 2005 after a modder released a hack for the game that unlocked the previously hidden content.

In June, 2006 the Federal Trade Commission found that Take-Two Interactive was deceptive in the way it marketed Grand Theft Auto: San Andreas but did not fine the company or order that they return any of their profits from the game.

While the company was not fined, they were placed on notice that if they again violate the ratings, they will be subject to a civil fine of up to $11,000 per a violation.

You may recall that in November of last year, U.S. District Court for the Southern District of New York granted preliminary approval of a settlement of several class action suits against Take-Two. TTWO expected then to pay out up to $2.75 million for the settlement, pending Court approval.

Turns out that few actually filed claims. On July 31, the Court said that "the plaintiffs could no longer meet their burden of showing that the case could proceed on the proposed class basis" according to an SEC filing.

Take-Two opts not to weigh in on whether an appeal is likely in the filing, but when a million bucks is offered and folks don't bite — only $30,000 in claims were filed — we'd have a hard time believing that one is in the cards. The attorneys involved already got their paycheck actually haven't yet been paid, at least on the plaintiff side. Makes me feel that much better about never completing "The Guide To Spending Your 'Hot Coffee' Settlement."

Update: Ted Frank from Overlawyered wrote in to clear some things up for us. He writes: "The plaintiffs' attorneys have not gotten their paycheck. My objection was premised on the grounds that the court should not approve a settlement that paid the attorneys so much more than what the class received; when the court rejected the settlement, it meant there was no court approval for a payment to the plaintiffs' attorneys."

Take-Two must cover over a million dollars in legal fees and has agreed to a hefty charitable donation as part of the settlement, but they'll pay out just $30,000 in resolving claims with consumers. The "benefits" to consumers ranged from $5 to $35 US, with some claimants getting a decaffeinated copy of San Andreas.

Unsurprisingly, another lawyer has poked his nose into the settlement, claiming that the lawsuit has no merit. That claim is partly based on the fact that so few offended parties wanted to experience the "Hot Coffee" healing power of cash.

Adding weight to the argument that the suit has no merit, is that it appears that some of those deposed were clueless about the game's content to begin with. Killing? Well known. But stealing? In Grand Theft Auto? Who knew?!

Anyone out there file a claim? We'd like to know!

Hidden Sex Scenes Draw Ho-Hum, Except From Lawyers [New York Times - thanks, Michael!]

Full box art after the jump.

GTA San Andreas Has Mutants [Kotaku Australia]

• Grand Theft Auto: San Andreas First Edition Disc - Replacement Disc
• Detailed Store Receipt - Cash payment up to $35.00
• General Credit Card Statement or Check - Cash payment up to $17.50
• Disc/Purchase Details - Cash payment up to $10.00
• No Disc/Purchase Details - Cash payment up to $5.00

Gaming Steve noted that the masses are well aware of the settlement opportunities, now that ads are running in magazines like People. Everyone involved has until May 16 to grab their cash. Good luck!

GTA Class Action Settlement [via Gaming Steve]

The lawsuit against Take-Two is still pending, but should the United States District Court for the Southern District of New York agree to the settlement, claims against the company will be dismissed "without any admission of liability or wrongdoing by Take-Two or Rockstar."

The publisher says that it will pay out between $1.025 million and $2.75 million in settlement benefits, which range from an edited copy of GTA: San Andreas to a cash payment up to $35 for those who can provide proof of purchase of the game from before July 20, 2005. There are, of course, stipulations to the proposed settlement, the details of which are in the full press release below.

Take-Two Interactive Software, Inc. Announces Preliminary Settlement of Consumer Class Action

New York, NY - November 8, 2007 - Take-Two Interactive Software, Inc. (NASDAQ:TTWO) today announced the settlement of all consumer class action lawsuits pending in the United States against the Company and its subsidiary Rockstar Games, relating to a third-party program called the "Hot Coffee Modification" that could be used by consumers to alter the content of the Grand Theft Auto: San Andreas video game. If the proposed settlement receives preliminary and final approval from the United States District Court for the Southern District of New York, all claims in these lawsuits will be dismissed without any admission of liability or wrongdoing by Take-Two or Rockstar.

Under the terms of the settlement, class members will be able to claim benefits if they swear that they: (a) bought a copy of Grand Theft Auto: San Andreas before July 20, 2005; (b) were offended and upset by the ability of consumers to modify and alter the game's content using the third-party Hot Coffee modification; (c ) would not have bought the game had they known that consumers could modify and alter the game's content using the third-party Hot Coffee modification; and (d) would have returned the game, upon learning the game could be modified and altered, if they thought this possible. Settlement class members who attest to these facts may apply for benefits that range from an exchange of the game disk for an edited copy of Grand Theft Auto: San Andreas to a cash payment of up to $35 for consumers who submit detailed proofs of purchase.

The actual value of all cash payments under the settlement will depend on the number of class members that apply for benefits. Take-Two has committed to spend at least $1.025 million on settlement benefits, and the settlement generally caps the defendants' out-of-pocket costs at no more than $2.75 million, in addition to the costs of providing notice to class members and paying a fee to plaintiffs' counsel. The Company previously established a reserve sufficient to substantially cover the expected cost of the settlement and related expenses. The full settlement terms will be described in the parties' Settlement Agreement, which the plaintiffs are expected to file with the Court in mid-November when they seek preliminary approval for the settlement.

"If the case had continued, we believe the court would have agreed that Take-Two was not liable for consumers acting independently to modify their games with third-party hardware and software to access normally inaccessible content," said Ben Feder, Chief Executive Officer of Take-Two. "Nonetheless, we believe it is in the best interest of the Company to avoid protracted and costly litigation to prove our case and to finally put this matter behind us."

The alleged killer Ezekiel Maxwell, aged 17, committed the murder after failing to take his prescribed medication. According to the Evening Standard, Maxwell "believed he was one of the principal characters called Carl Johnson" star of Rockstar Games' Grand Theft Auto: San Andreas.

More details are at The Evening Standard. Thanks for the tip, Man. Michael McWhertor

Boy on skunk cannabis butchered a grandmother [The Evening Standard]

While I fantasize about delicious toast, here are the top ten games sold in Japan for the week of February 12 to 18.

01. Professor Layton and the Mysterious Village (DS) - 136,736 / new
02. Tales of Destiny 2 (PSP) - 73,022 / new
03. Bleach DS 2nd: Kokui Hirameku Requiem (DS) - 45,486 / new
04. Death Note (DS) - 44,600 / new
05. Soul Cradle: Sekai wo Kurau Mono (PS2) - 43,253 / new
06. Picross DS (DS) - 41,105 / 156,664
07. Dragon Quest Monsters Joker (DS) - 39,598 / 1,134,069
08. Wii Sports (Wii) - 39,128 / 1,043,683
09. Wii Play (Wii) - 29,342 / 908,774
10. More Brain Age (DS) - 28,254 / 3,991,966

Pretty amazing that the mediocre Wii Play will soon be a million seller.

Keep on keepin' on to see where previous chart toppers Virtua Fighter 5 for the PLAYSTATION 3 and Grand Theft Auto San Andreas for the PlayStation 2 checked in.

11. New Super Mario Bros. (DS)
12. Wario: Master of Disguise (DS)
13. Harvest Moon: The Island I Grew Up On (DS)
14. Animal Crossing Wild World (DS)
15. Hotel Dusk: Room 215 (DS)
16. Common Knowledge Training (DS)
17. Grand Theft Auto: San Andreas (PS2)
18. Mario Kart DS (DS)
19. Brain Age (DS)
20. Pok mon Diamond (DS)
21. English Training (DS)
22. Kanji Brain Test 2M (DS)
23. Pok mon Pearl (DS)
24. J-League Pro Soccer 5 (PS2)
25. Virtua Fighter 5 (PS3)
26. Monster Hunter Portable (PSP)
27. Heisei Board of Education DS (DS)
28. Puyo-Puyo! (DS)
29. Zero no Tsukaima (PS2)
30. Kanji Test (DS)

Look at those non-DS games hang on for dear life. It's so thrilling!

Speaking of thrilling, I need some sexy title help, Kotaku readers. We've got recurring themes inHot Flashes, Kotaku Magu, Rumor Smash and a handful of others, but I really need something that screams "these are Japanese sales charts, please look at them." I'd do it myself and come up with some brilliant, natch, but I have a wicked bad hangover. Michael McWhertor

Media Create Weekly Sales

Here are the top ten games solid in Japan for the week of January 15th to the 22nd, courtesy of Media Create.

01. Grand Theft Auto: San Andreas (PS2) - 227261 / new
02. Dragon Quest Monsters Joker (DS) - 103706 / 1026700
03. Sangokushi Taisen DS (DS) - 77229 / new
04. Picross DS (DS) - 71794 / new
05. Hotel Dusk: Room 215 (DS) - 59379 / new
06. Wii Sports (Wii) - 58886 / 910422
07. Wario: The Seven (DS) - 47350 / 138599
08. Wii Play (Wii) - 43612 / 808425
09. Pachinko Winter Sonata (PS2) - 41411 / 41411
10. More Brain Age (DS) - 34028 / 3902307

Next ten after the jump.

11. New Super Mario Bros. (DS)
12. Common Knowledge Training (DS)
13. Animal Crossing: Wild World (DS)
14. Prince of Tennis: Doki-Doki Survival (DS)
15. The Idolm@ster (Xbox 360)
16. Mario Kart DS (DS)
17. Pokemon Diamond (DS)
18. English Training (DS)
19. Brain Training (DS)
20. Shining Force EXA (PS2)

While one Xbox 360 game cracked the top twenty, last week's sales darling Gears of War is noticeably absent. It didn't even make the top thirty this week. The only PLAYSTATION 3 game to chart was the recent port of From Software's RPG Enchanted Arms.

Next gen, just call it quits already! DS is your master now. Michael McWhertor

More Media Create Sales

Nothing says video games like plastered trucks. To promote the release of Grand Theft Auto: San Andreas, Capcom is rolling out the above truck to rampage the streets of Tokyo and Osaka from today to January 26th to the 28th. It lights up at night! Bad ass, especially when compared to what Electronic Arts is rolling out across Japan for Sim City DS (below).

Even sadder when compared to the Tokyo city GTA bus racing through Shibuya, Roppongi and Shinbashi (hit the jump). Brian Ashcraft

GTA Rides
EA Ride [Famitsu]

Even though the title was released in the States back in 2004, Capcom is finally publishing Rockstar's controversial Grand Theft Auto: San Andreas on January 25th. And they've got the launch party to prove it. Just check out after the jump what the festivities held at Shibuya's Club Asia for this 18-years-old-and-up-game:

• Girls with fake Peter Moore-esque fake GTA tattoos.
• A BMX stunt show. How 80's!
• Caution tape and salarymen.
• Hoodies. Yes, hoodies.
• A Japanese hip-hop star (the country's first rapper at that) with shameful sweaty pits. Wear one shirt, dude!
• Blind-folded AND seated basketball dribbling with traditional drum accompaniment.
• Non alcohol drinks with bad pun names like "GTA Coke. And I quote: "The recipe is a 'buzz' and coke cocktail." So clever.

Capcom GTA Event [Watch Impress]

In various cities in North America, Rockstar painted the sides of buildings with Grand Theft Auto promotional murals. The above one was found in in Vancouver and defaced by a displeased gamer, who to his credit refrained from spraying "sux0r" or "sukc." Now, that's classy. Brian Ashcraft

More Here [Aeropause]

It's the weekend, thank god. I swear, if I had to write one more post, I was going to beat a small child to death with a bag of puppies (or perhaps vice versa) out of a pure need for malicious cathartic relief.

But now it's Friday! Hooray! That means 48 hours of gaming! So what do I have planned? Well, I'm trying to beat Grand Theft Auto: San Andreas... I've still never done that, but I'm closer than ever before. Unfortunately, I just hit Flight School. Sigh. As tedious as everyone has claimed. I think the only way to get through it is probably to just get really drunk this evening and power on through.

What about you, o my little poppets? What virtual adventure will absorb yet another 48 hours of your mortal coil? Let us know in the comments. Florian Eckhardt

Wedbush Morgan analyst Michael Pachter is waving his hands around to shoo off investors after the subpoenas.

We note that grand jury subpoenas are founded in criminal investigations... As such, we believe that it is likely that one or more Take-Two employees may be subject to a potential criminal indictment.

Intriguing. You'd think that video game publishers couldn't be indicted for failure to subscribe to a voluntary ratings system, but luckily, someone's thinking of the children. Isn't it interesting, though, that employees of a games publisher can face criminal indictment for including hidden scenes in a game that are far tamer than the ones pornographers film and sell with impugnity? And can someone explain to me how a kid walking in and buying a copy of Grand Theft Auto is more corrupting than them walking into a bookstore and buying a volume by everyone's favorite "I punched her in the stomach, then fucked her" novelist, Henry Miller?

No need to answer that rhetorical questions: these punk kids today would never be caught dead reading a book. Florian Eckhardt

Take-Two Could Face Criminal Indictment, Says Analyst [GamesIndustry]

The ESRB will be holding a 'Commitment to Parents' meeting in Washington D.C. at 11:30am tomorrow, hopefully to reiterate the message they've stated perfectly clear for years now: a fair, balanced games rating system can not work without a semblance of reason and education on the parts of parents, consumers, politicians (yeah, right. These guys are professional ignoramuses with their fingers on the 'Fear' hot button) and retailers.

Attending the meet-up will be Entertainment Software Association president Doug Lowenstein, Entertainment Merchants Association president Bo Andersen and ESRB president Patricia Vance. Also controversial conservative Sen. Rick Santorum, Sen. George Allen and Sen. Mark Pryor.

If you go, make sure to boo these last jackasses. They're the problem, not Hot Coffee. Dry press release after the jump. Florian Eckhardt

ESRB RETAIL COUNCIL (ERC) AND MEMBERS OF CONGRESS TO ANNOUNCE "COMMITMENT TO PARENTS" PARTNERSHIP

NEW YORK - The Entertainment Software Rating Board (ESRB) will be joined by Senators Rick Santorum (R-PA), George Allen (R-VA), and Mark Pryor (D-AR) to announce an unprecedented commitment on the part of leading video game retailers to enhance compliance with store policies regarding the sale of Mature-rated video games and educate customers about ESRB video game ratings, among other initiatives. The ESRB Retail Council (ERC), whose members include Best Buy, Blockbuster, Circuit City, GameStop/EB Games, Movie Gallery/Hollywood Video/Game Crazy, Target and Wal-Mart, is a partnership between ESRB and leading computer and video game retailers representing approximately 80% of video game sales and over 20,000 retail locations nationwide.

WHAT: Announcement of ESRB Retail Council "Commitment to Parents"

WHO: U.S. Senator Rick Santorum (R-PA)
U.S. Senator George Allen (R-VA)
U.S. Senator Mark Pryor (D-AR)
Ms. Patricia E. Vance, Entertainment Software Rating Board
Mr. Don Frieson, Wal-Mart
Mr. Dan Kaufman, GameStop
Ms. Judy Norris, Blockbuster
Mr. Rick Vergara, Circuit City
Mr. Doug Lowenstein, Entertainment Software Association
Mr. Bo Andersen, Entertainment Merchants Association

WHEN: Wednesday, June 21, 2006 11:30am (promptly)

WHERE: Russell Senate Office Building, Room 332
(Senate Agriculture Room)
Washington, DC 20510

-30-

About Entertainment Software Rating Board (ESRB)
The ESRB is a non-profit, self-regulatory body established in 1994 by the Entertainment Software Association (ESA). ESRB independently applies computer and video game content ratings, enforces advertising guidelines, and helps ensure responsible online privacy practices for the interactive entertainment software industry.

Hey, kids! Can you see what's wrong with this description of the Hot Coffee mod by KUTV-2 News anchor Bill Gephardt?

The government reprimands makers of a popular video game. Bill Gephardt says there's a loophole in this kid's game that allows players to see porn. Oops! The Federal Trade Commission says that the video game Grand Theft Auto: San Andreas has a tricky back door area and with the click of the code word 'hot coffee' players can view nudity and play sex games.

Man, if Hot Coffee was a secret code, it would quickly replace Up-Up-Down-Down-Left-Right-Left-Right-B-A-Start as my favorite code ever. Unfortunately, it's a mod that is rather obtusely applied to the original PS2 version of San Andreas.

There's also, of course, the entire chronological issue of his report, which represented Hot Coffee as a current problem as opposed to one that Take Two and Rockstar hadn't long since fixed . Or the fact that Grand Theft Auto: San Andreas was never marketed as a kids' game. Oh, and code words are rarely clicked. But who expects journalists to take a story for a test-drive before they hyperventilate anymore? Florian Eckhardt

Irresponsible Journalism Strikes Again [Press the Buttons]

Anyway, after Rockstar accidentally got an interactive, thrust-by-thrust sex game in San Andreas, the FTC promised the concerned that they'd "look into it." And now, one year later, 1UP is promising that a report on whether or not Rockstar deceived the ESRB is expected soon.

Let's hope common sense prevails. Although there is a valid point that Rockstar's Hot Coffee mini-game went beyond titillation into quasi-pornography, the fact remains that it is a mod and companies should not be forced to disclose to the rating boards every asset in a game that some intrepid hacker may be able to fish out of the source. Although I have to admit, the fallout from Hot Coffee was good for me, as a gamer: it got Rockstar to release a second version of the PS2 game with that stupid bugged Zero mission

We'll let you know when the report from a bunch of career hypocrties comes in. FLORIAN ECKHARDT

FTC's Findings on GTA Forthcoming [1UP]

And, just a brief public service announcement, a quick Google image search can net you some BloodRayne nudes for Tuesday if you'll be solo and into that sort of thing. It's better than flowers, trust me.

Videogame Sex [1UP]

Take-Two Interactive filed their annual report today with the U.S. Securities and Exchange Commission. Most of the stuff in the report talks about things we already reported on following their earnings reports released in October. But the report does have an update on the company s legal proceedings, and it s a doozy of an update.

From the report:

In January 2006, the City Attorney for the City of Los Angeles filed a complaint against the company and its subsidiary, Rockstar Games, in the Superior Court of the State of California. The complaint alleges that the company and Rockstar violated sections of the California Business and Professions Code prohibiting untrue and misleading statements and unfair competition and that the company and Rockstar were unjustly enriched as a result of the alleged failure to disclose that Grand Theft Auto: San Andreas contained hidden content which should have resulted in the game receiving an Adults Only ( AO ) rating from the ESRB rather than a Mature ( M ) rating. The complaint also alleges that we made misleading statements as to the origin of the hidden content. The complaint seeks injunctive relief, restitution for purchasers of the game and civil fines. We believe that the allegations in the City Attorney s complaint are without merit, and intend to vigorously defend against these claims. We have also received requests for documents and information from the Attorneys General of the States of North Carolina and Connecticut relating to Grand Theft Auto: San Andreas.

So, to summarize, the company is going to fight the L.A. suit and both North Carolina and Connecticut seem to be lining up for similar, state-level suits.