Shares of toy maker Jakks Pacific Inc. plunged 22% on Tuesday after the Malibu company was sued by the licensor of a popular line of wrestling video games. Jakks' stock fell $5.34 to $18.81 on Nasdaq.
World Wrestling Entertainment Inc. filed a federal lawsuit Tuesday alleging a bribery scheme aimed at obtaining its licenses for video games and toys.
The lawsuit, filed in New York, claims that Jakks and its subsidiaries made payoffs to win the licensing rights for the wrestling company's toys and games. WWE said it sued Jakks, video game maker THQ Inc. and others, alleging the companies violated anti-bribery laws.
In a statement, Jakks denied any wrongdoing and said it was in discussions to restructure its toy licenses with WWE and THQ.
According to the lawsuit, payments of about $100,000 were made to a foreign bank account of Stanley Shenker, WWE's licensing agent, who allegedly split the money with James Bell, WWE's senior vice president of licensing and merchandising. Bell and Shenker recommended a license be granted to a joint venture of Jakks and THQ.
The allegations also are part of a federal grand jury investigation in Connecticut, WWE's attorney, Jerry McDevitt, and Bell's attorney, John Williams, told the Associated Press.
Williams said he was surprised by the suit because he had expected a settlement. Calabasas-based THQ said it was not directly accused in the suit and was unaware of any wrongdoing by Jakks and others.
THQ shares fell 54 cents to $18.12 on Nasdaq. WWE shares were unchanged at $11.85 on the New York Stock Exchange.
Separately, Jakks reported Tuesday that its third-quarter profit more than doubled on strong sales of its TV Games toys. Net income rose to $23.8 million, or 88 cents a share, from $9.6 million, or 39 cents, a year earlier, beating analysts' expectations. Jakks' quarterly sales climbed to $206.1 million from $90.3 million.
Chief Executive Jack Friedman said, "We are encouraged about the upcoming holiday season based on early responses from our retail partners."
Times wire services were used in compiling this report.
