On Tuesday the law office of Robbins Geller Rudman & Dowd LLP submitted a class action lawsuit against Electronic Arts in the United States District Court for the Northern District of California. The lawsuit is on behalf of Electronic Arts common shareholders who purchased the game publisher's stock between July 24, 2013 and December 4, 2013, aka the "Class Period."
According to the lawsuit, Electronic Arts allegedly issued "materially false" and "misleading" statements highlighting the purported strength of the company's rollout of Battlefield 4 this fall. Electronic Arts then issued strong fiscal 2014 financial guidance for the company, and increased that guidance on October 29. Thanks to these positive statements, stock steadily climbed to as much as $28.13 per share, allowing senior executives to sell their stock at artificially inflated prices.
Once November 15 came around, stock value began to decline due to reports of "multiple glitches and significant crashes" related to the PlayStation 4 version of Battlefield 4. Stock value fell again on December 4 when Electronic Arts told the gaming community that sales of Battlefield 4 would cease until the problems could be fixed. Ultimately, shares declined more than 28 percent in value since the reported high in October.
Statements made by Electronic Arts during the Class Period were "materially false and misleading" because they failed to disclose -- and misrepresented -- a number facts that were allegedly known to or recklessly disregarded by the company. For one, Battlefield 4 was riddled with bugs and multiple other problems, and as a result, Electronic Arts would not achieve a successful holiday season 2013 rollout of Battlefield 4.
Secondly, the unit responsible for Battlefield 4 was so "deficient" that all other projects were put on hold so that the entire unit could focus on fixing the problems. Because of this, there was no way Electronic Arts would be on track to achieve the financial results it had told the market it was on track to achieve during the Class Period.
The complaint charges Electronic Arts and a number of its officers and directors with violations of the Securities Exchange Act of 1934. The unnamed Plaintiff is seeking to recover damages on behalf of all purchasers of Electronic Arts common stock during the Class Period.
