Opinion ID: 1038518
Heading Depth: 3
Heading Rank: 2

Heading: Atari Litigation

Text: Ricker next alleges that an Atari lawsuit filed against (and settled by) Zoo during the class period corroborates Zoo’s alleged revenue-recognition problems with Cokem and further supports scienter. Incorporating allegations from Atari’s complaint, Ricker explains that Zoo contracted with Atari to advance funds enabling Zoo to fulfill existing video-game purchase orders. In exchange, Zoo would remit payment for those purchase orders to Atari, including $1.6 million Cokem owed. Atari went unpaid and sued, claiming one of two things had occurred. Either Zoo received money for the purchase orders and kept it, or one or more of Zoo’s customers cancelled purchase orders covered by the Atari agreement and Zoo retained Atari’s advance.