EA is under fire once again for the bug-ridden launch of Battlefield 4, with a formal complaint has been filed by the law offices of Robbins Geller Rudman & Dowd LLP. The complaint alleges that EA directors and officers violated of the Securities Exchange Act of 1934. RGR&D specifically alleges that the executives at EA released merit-less and misleading statements during the period of July 24-December 3 in order to inflate the stock price of the company. Many of current and former EA executives then sold large amounts of stock at this inflated price. An image of the executives who sold stock during that period can be found here, courtesy of Gamespot.
The suit goes deeply into the July conference call with investors, which saw many executives speaking highly of future EA titles. EA Chief Operating Officer Peter Moore said “We couldn’t be happier with the quality of games our teams are producing, or the early receptions those games are getting from critics and consumers”. Moore went on to speak of many of EA’s massive title’s reception at E3, like Titanfall’s Best of Show awards, Need for Speed winning best racing game, and Battlefield 4’s high praise from critics.
EA CEO Andrew Wilson spoke during the call, telling investors “In short, EA is in great shape.” Saying that the big bets they have taken with blockbuster games like Battlefield 4 have resonated highly with consumers. Moore later spoke of how the game’s pre-order numbers are outpacing Battlefield 3’s.
It should be noted that there is currently no class action lawsuit in motion, instead a lead prosecutor must be named within the next 60 days, before February 15th, 2014, and it can then move forward to seek damages for anyone who purchased Battlefield 4 during the period of July 24th to December 3rd. EA has come out strong against these claims, telling a Gamespot representative “We believe these claims are meritless. We intend to aggressively defend ourselves, and we’re confident the court will dismiss the complaint in due course.”
The main crux of this lawsuit is that EA executives knew they were releasing a broken product and specifically mislead investors and consumers with instances like the July conference call. The suit alleges that these executives then sold the stock in order to make as much money as possible before the Battlefield 4 released. If this is true, I believe it would be classified as insider trading. It should be noted that while misleading and lying is obviously illegal, trying to keep your investor’s and consumer’s faith certainly is not.
This reporter’s opinion: I don’t see this lawsuit having much merit. While I dislike the buggy as all hell launch of Battlefield 4, it does not seem to deserve a lawsuit. The grounds for this lawsuit to work would be that EA needed to know, as of July of 2013 that the game had many massive and gamebreaking bugs that would not be ironed out by launch. It’s next to impossible for a company to know that when it had not been publicly tested yet, and had not yet even been completed. The game’s beta began at the beginning of October, and found many of the games bugs, and they were fixed before launch.
Unfortunately, even more bugs were discovered at the game’s launch. Is this illegal? I don’t think so. Nearly every major online game now has bugged associated with it during it’s launch. If a judge were to rule in favor of the plaintiffs in this case it could also set a dangerous precedent against game and tech developers with bugs in there games.
It would also seem preposterous that the newly named CEO Andrew Wilson, Patrick Soderlund (Executive Vice President of EA studios) and many others would artificially inflate the companies stock price in order to illegally sell there stock, just on the basis that Battlefield 4 would be a homerun hit (It should be noted also, that the game was a homerun hit, being the number 2 selling game of November). Consider for a moment, that their mobile division had a 30% increase over previous years revenue, Battlefield 3 Premium had been adopted by over 4 million gamers, they had mega mobile hits with Real racing 3 and Simpson’s Tapped Out, and FIFA 13’s digital revenue, thanks to Ultimate Team, was a sky high $70 million. All of these factors lead to EA being the #1 publishers in Western retail and #4 global publisher for mobile markets. Those items alone, even without the talking up of Battlefield 4 like would have risen the stock price significantly. There is also no indication that they did not file notice of these sales ahead of time, so it would seem they were done in a perfectly legal manner. I just don’t see this lawsuit having any real legs to stand on besides this game released with bugs, and consumers were mad.
by, Bobby Marquardt
Special thanks to Reddit user Shadowrabbit for the financial information about EA’s other titles, and arguably creating a more compelling argument for the lawsuit to be thrown out then I have.