When will THQ’s woes end? The latest kick to the nuts is the filing of a class-action lawsuit by its shareholders in response to the failure of the uDraw tablet. Less than a week ago, law firm Holzer, Holzer & Fistel began investigating THQ for “false and misleading” marketing information that was allegedly given to shareholders regarding the uDraw peripheral. The law firm clearly dug up what it needed, because the class-action lawsuit has since been filed.
THQ abandoned uDraw in February this year, shortly after the start of their financial down-turn. Now, however, the shareholders want blood, and their lawyers are citing a violation of the Securities Exchange Act of 1934, which, in spite of our limited legal knowledge, sounds kind of serious. Basically, the lawsuit claims that THQ provided “materially false and misleading” information and “failed to disclose adverse facts” about the uDraw peripheral.
Furthermore, the lawsuit alleges that THQ ignored the fact “that demand for the Company’s uDraw was well below internal expectations and the Company would have to take back, or provide price protection, on hundreds of thousands of uDraw units that it had sold.”
uDraw initially debuted on the Wii where it underperformed. It was hoped (although from the sounds of this lawsuit, THQ deliberately misled shareholders into believing) that uDraw would fare better on PlayStation 3 and Xbox 360 – it didn’t.
As a result of this, the class-action lawsuit aims to claim back financial damages for all purchasers of THQ’s “common stock” during the period of 03 May 2011 to 03 February 2012. We’ll keep an eye on this and update you over the coming weeks.