Activision has announced that the Securities and Exchange Commission (SEC) has launched a formal investigation into the company's stock option backdating practices.
According to the details contained in the company's amended quarterly report submitted to the SEC, Activision said it had been notified of the probe earlier this month. That followed an informal inquiry into its options backdating by the SEC in July 2006.
Under the formal nature of the investigation regulators have the power to subpoena witnesses. They can also demand that Activision produces documents to determine if its practice of backdating, which is not necessarily illegal if it is reported to shareholders, has been accounted for satisfactorily.