(CN) - A class of shareholders claims that video games developer and publisher THQ Inc. inflated the value of stock and secured a $75 million line of credit by misrepresenting demand for a gaming graphics tablet.
Lead plaintiff Khalil Zairian claims THQ developed the uDraw GameTablet for the Microsoft Xbox 360, Sony Playstation 3 and Nintendo Wii.
According to the complaint, THQ concealed or at least "recklessly disregarded" that demand for the handheld tablet was on the wane after the product flopped among gamers.
In early December 2011 the company was forced to adjust its outlook after "'weaker than expected'" uDraw sales but continued to "conceal the true scope of the problems at the company," the lawsuit states.
"As a direct result of defendants' disclosures on December 7, 2011 and February 2, 2012, the price of THQ common stock fell precipitously, falling from its closing price of $1.46 per share on December 7, 2011 to $0.53 per share on February 3, 2012 - a loss of $0.93 per share, or 64%. These drops removed the inflation from the price of THQ common stock, causing real economic loss to investors who had purchased THQ common stock during the class period," the complaint states.
The class says plummeting THQ stock was the result of the company's "fraud finally being revealed to investors and the market."
THQ and directors Brian Farrell and Paul Pucino are named as defendants.
The class is represented by David Walton with Robbins Geller Rudman & Dowd of San Diego, Calif. and seeks unspecified damages.