Take-Two says it is under SEC investigation

Take-Two Interactive Software Inc. said it was under formal investigation by the U.S. Securities and Exchange Commission over its accounting for stock-options grants.

The video game publisher said in a filing with the SEC late on Wednesday that the formal order allows regulators to subpoena witnesses regarding the stock options practices of the company, its directors, officers or employees.

In January, Take-Two said a review of its past options grants uncovered a significant number that were backdated during a period of more than six years to August 2003.

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The investigation is the latest in a series of woes for Take-Two, which has faced overstated financial results, a scandal over hidden sexual content in its popular game “Grand Theft Auto: San Andreas” and improper stock options grants.

Last week, investors owning 46 percent of Take-Two replaced the company’s board and ousted its chief executive in an effort to improve corporate oversight.

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Analysts have also said the company faces operational challenges, namely the need to come up with a new hit to accompany “Grand Theft Auto.”

Strauss Zelnick, a former chief executive at BMG Entertainment, was named chairman of the company and his business partner, Ben Feder, was named acting chief executive. Zelnick said the board aimed to outline a new strategy for Take-Two within three to six months.