That whoosh you're hearing is the sound of Take-Two Interactive's stock price (NASDAQ: TTWO) in free fall.

Shares in the Grand Theft Auto publisher closed at 12.87 yesterday following news that a grand jury in New York had subpoenaed corporate records including those relating to last year's Hot Coffee scandal. 12.87 represents Take-Two's lowest stock price since early 2003. In after-hours trading prices dropped even more, to 10.30.

Bad news continues to pile up for T2. As reported by today's New York Post, the firm is in the crosshairs of D.A. Robert Morgenthau not just over Hot Coffee, but for the way it reported what the Post terms "key financial information."

The paper reported that the subpoenas served on T2 were "unusually wide-ranging" and demanded paperwork related to "acquisitions, partnerships and the recent dismissal of its longtime auditor, PricewaterhouseCoopers."

The Post also recapped T2's history of run-ins with regulatory agencies. Most notably, in June, 2005 the GTA publisher settled an SEC investigation by agreeing to a $7.5 million penalty for what the newspaper describes as "orchestrating a multi-year revenue scam."

As part of that deal CEO Ryan Bright was forced to step down and paid a $3.6 million fine. The Post also reports that "Despite the fines and shareholder losses, several people tied to the revenue scam are still employed by the company."

The Hot Coffee scandal, of course, is well-known to GP readers and the video game community. But also vexing Take-Two, according to the NY Post, is the resignation of board member Barbara Kaczynski in early 2006.

As reported at the time by GamePolitics, Kaczynski, who chaired the Take-Two board's audit committee, was highly critical of the publisher in her letter of resignation, citing an "increasingly unhealthy relationship between senior management and the board of directors ... characterized by a lack of cooperation and respect."

Shortly after leaving the company, Kaczynski hired a well-known securities defense lawyer, leading to speculation that the financial matters she left behind might be the subject of an investigation.

According to the Post, T2 is also in financial straits over the huge licensing fee it paid to Major League Baseball for exclusive rights (GP would call them "monopoly rights" but that's another rant for another time) to create MLB video games.

"They are selling a lot of MLB games," an unnamed stock trader told the Post, "but they aren't making a dime."

The New York Times has a little more on the T2 situation in Tuesday's edition.

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