Electronic Arts is the target of a class-action lawsuit that charges the company violated U.S. securities laws by allegedly misleading stockholders as to the quality of Battlefield 4 and the publisher's PlayStation 4 titles.
The complaint was filed yesterday in U.S. District Court for the Northern District of California by the law firm Robins Geller Rudman & Dowd LLP. Acting on behalf of purchasers of EA common stock between July 24 and Dec. 4, the firm alleges that the publisher violated sections of the Securities Exchange Act of 1934 by making "materially false and misleading statements highlighting the purported strength" of Battlefield 4. EA raised its guidance for its 2014 fiscal year on Oct. 29 based on better-than-expected performance during the preceding financial quarter.
According to the complaint, those statements caused EA's stock price to rise — during the period cited in the suit, it hit a high of $28.13 per share on Aug. 23 — which allegedly allowed certain "senior executives to sell their Electronic Arts stock at artificially inflated prices."
Since the Oct. 29 launch of Battlefield 4 on PlayStation 3, Xbox 360 and Windows PC, and particularly since its mid-November releases on PlayStation 4 and Xbox One, players have been dealing with a wide variety of problems such as bugs, connectivity issues and crashes. As a result, developer EA DICE said on Dec. 4 that it is halting development on further Battlefield 4 expansions until it can "sort out all the issues." The announcement caused EA's stock price to drop to $21.01 by Dec. 5, a level 25 percent below the aforementioned August apex. The complaint also mentions performance issues with the PlayStation 4 versions of some EA titles, such as Need for Speed Rivals.
The complaint charges that EA officials "failed to disclose and misrepresented" a number of issues
The complaint charges that EA officials "failed to disclose and misrepresented" a number of issues that they were aware of but "recklessly disregarded" — namely, that Battlefield 4 was so "riddled with bugs and multiple other problems" that it wasn't going to have a successful launch, and that because of that, "Electronic Arts was not on track to achieve the financial results it had told the market it was on track to achieve."
Reached for comment, a representative for EA told Polygon, "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." A different law firm said last week that it was investigating whether to file a lawsuit against EA based on similar concerns about Battlefield 4. You can read the full legal complaint in the source link below.
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