Funcom offices raided by Economic Crimes unit

UPDATE: Funcom confirms investigation, claims the company and its games are operating as normal

UPDATE: Funcom has confirmed that the company is under investigation by Økokrim over suspected, "infringement of the provisions of the Securities Trading Act with regards to financial information given to the market surrounding the launch of The Secret World." Funcom is giving Økokrim its full cooperation to bring the situation to a conclusion as soon as possible.

Despite its employees being sent home on the day of the raid, Funcom claims that the company is operating, "as normal, and the company remains fully committed to games in development as well as the continued operation and updating of existing live games. Yesterday's events is not expected to have any impact on the company's continued operation or the development on future releases.

"Please also note that trading in the company stock was only suspended temporarily yesterday, and trading was back to normal shortly thereafter. We were also happy to see that the way we handled the communication to the market after the events was well received, and the stock climbed throughout today."

ORIGINAL STORY: Employees at Funcom's offices in Oslo, Norway were sent home today under orders from the Økokrim economic crime unit.

According to a report from the Norwegian news site E24, officers from The National Authority for Investigation and Prosecution of Economic and Environmental Crime - a.k.a. Økokrim - were waiting at Funcom's offices this morning.

Witnesses report that the Økokrim officers seized enough documents from the company to fill several boxes. Employees were sent home just before midday, though neither Funcom's management nor the Økokrim representatives would comment on the reasons for the raid.

Funcom's stock ceased trading on the Oslo stock exchange this morning. Representatives from the exchange told E24 that it was waiting on more information before further action could be taken.

In a report from the Norwegian site News In English, the Økokrim has charged Funcom with breaching the Securities Trading Act regarding information disclosed to the market about its ambitious MMO project, The Secret World. The period in which the false or misleading disclosures were made runs from August 2011 to its launch in July 2012, and the two months that followed. There are also questions over how Funcom shared sensitive information during that time.

GamesIndustry International has also made contact with Funcom to press the matter.

In July 2012, three months before the end of the period under investigation and just prior to the launch of The Secret World, Trond Arne Aas stepped down as CEO of Funcom, taking on an advisory role and ceding his place on the board.

The Secret World experienced a difficult launch, meeting a mixture of tepid reviews and waning interest in the subscription MMO model among consumers. Shortly after, the company laid off an undisclosed number of staff in the name of reducing costs. Those costs became abundantly clear in the Q2 financial report that followed at the end of August, which showed a loss of $49 million - compared to a $3 million profit in the prior year quarter.

"The Company still considers it likely that sales for the 12 months period following launch of the game will be less than half of what was presented in the Conan-like scenario in Q1 presentation," the company said at the time.

Funcom dropped The Secret World's subscription model before the end of the year, but its impact reverberated for months afterwards. In January last year, the company closed the Beijing studio that had provided art and animation for the game, and drastically reduced the headcount at the Montreal studio it had opened less than four years before.

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Latest comments (3)

Mats Holm Battlefront Producer, Electronic Arts6 years ago
Reading the Norwegian newspapers on this, insider trading along with overhyping info to the media. I am not surprised that an investigation was started, FunCom stocks are super volatile, and being the only game company on Oslo BÝrs it is easily swayed by the local media. If someone made money on it (and someone did, and a some Norwegian celebrities invested in this company and lost big) someone is going to complain and an investigation started.

I have no idea if they deserved it or not, but not shocked that it has happened.
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Tim Ogul Illustrator 6 years ago
Man, if game studios can be prosecuted just for pretending that a subscription model is remotely viable in the modern market then Zenimax and Carbine had better watch their backs and shred EVERYTHING.
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Yiannis Koumoutzelis Founder & Creative Director, Neriad Games6 years ago
Sad to hear Funcom is in trouble. I hope things turn out for the best!
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