On Tuesday, securities law firm Robbins Geller Rudman & Dowd LLP filed a complaint that will likely lead to a class action lawsuit against Electronic Arts in the U.S. District Court for the Northern District of California on behalf of Ryan Kelly and anyone else who purchased EA stock between July 24 and December 4 of this year.
The complaint names EA as an entity as well as a few top EA men -- including Peter Moore, Andrew Wilson, and Blake Jorgensen -- as defendants, alleging that they violated the Securities Exchange Act of 1934 and knowingly or recklessly made false or misleading public statements about the quality of Battlefield 4 in a gambit to juice sales.
The complaint alleges that senior EA executives knew
-- and did not disclose to the public or public shareholders -- that Battlefield 4
was a buggy, incomplete mess that would not be able to function as advertised if it was released on schedule.
Instead, they continually asserted that the game was of excellent quality, both in public interviews and during conference calls with investors.
There are tons of quoted examples of these allegedly misleading or reckless statements compiled in the legal paperwork, including Peter Moore's statement -- during a call meant to update investors on the quality of EA products -- that "We couldn't be happier with the quality of the games our teams are producing or the early reception those games are getting from critics and consumers," on the evening of July 23, 2013, three months before Battlefield 4
When the game went live, players and critics quickly began complaining of game-breaking bugs, including horrendous clipping issues and the inability to reliably find and stay connected to a multiplayer match. It got so bad that DICE felt the need to publish a public bug tracker
that would let players know exactly what problem(s) it was working on fixing, as well as the status of said fix.
EA stock took a dive and the company went on the defensive immediately, issuing public statements that it was pulling people off other projects in order to focus its resources on fixing Battlefield 4
. The complaint alleges that this decision ruined EA's financial prospects for the coming quarters, costing investors more lost revenue on top
of the devalued stock.
Once again, there are a few good quotes cited in the complaint, including a statement
from an EA representative to Polygon's Dave Tach that read: "First, we want to thank the fans out there that are playing and supporting us with Battlefield 4. We know we still have a ways to go with fixing the game â€" it is absolutely our No. 1 priority. [...] We're not moving onto future projects or expansions until we sort out all the issues with Battlefield 4. We know many of our players are frustrated, and we feel their pain. We will not stop until this is right."
The complaint further alleges that EA senior executives sold stock at inflated prices prior to the release of Battlefield 4
, thus profiting from hype surrounding the game.
For example, the complaint alleges that EA CEO Andrew Wilson sold 40,000 shares of stock at a share price of $25.50 on July 26, with proceeds from the sale totaling more than $1 million -- $1,020,000, to be exact.
The complaint does not go into detail about exactly what portion of the proceeds from sales of EA stock by the defendants is alleged to be ill-gotten. Gamasutra estimates that if Wilson had tried to sell the same amount of stock three days earlier, before
EA's stock price jumped up in response to the aforementioned (allegedly) misleading conference call that included Moore's statement about the quality of Battlefield 4
, proceeds would have been roughly $953,200 -- or an estimated $50,000 in profit on company stock traded at allegedly inflated prices.
As you might expect, EA disputes this complaint. When reached for comment, EA Senior Director of Corporate Communications John Reseburg told Gamasutra via email that "We believe these claims are meritless. We intend to aggressively defend ourselves, and weâ€™re confident the court will dismiss the complaint in due course."
For what it's worth, we couldn't find a lot of evidence in the filing that anyone at EA knew that Battlefield 4
wasn't ready for primetime when it came out in October. Instead, it appears as though the plaintiffs are alleging the defendants must have known what state Battlefield 4
was in thanks to their senior positions, thus rendering their positive statements about the game's quality false and misleading.
The plaintiffs hope to make EA pay for all damages sustained as a result of the defendants' wrongdoing -- which will be decided during the course of the trial -- plus interest, on behalf of everyone who bought EA common stock between July 24 and December 4. For more information and/or juicy quotes, you can read over the class action complaint