{"id":74665,"date":"2026-11-03T14:25:24","date_gmt":"2026-11-03T05:25:24","guid":{"rendered":"https:\/\/automaton-media.com\/en\/?p=74665"},"modified":"2026-11-03T14:25:25","modified_gmt":"2026-11-03T05:25:25","slug":"activist-investor-calls-on-game-publisher-gungho-to-file-2-25-million-lawsuit-against-former-ceo-over-alleged-failure-to-prevent-fraud-by-an-employee","status":"publish","type":"post","link":"https:\/\/automaton-media.com\/en\/news\/activist-investor-calls-on-game-publisher-gungho-to-file-2-25-million-lawsuit-against-former-ceo-over-alleged-failure-to-prevent-fraud-by-an-employee\/","title":{"rendered":"Activist investor calls on game publisher\u00a0GungHo to file $2.25 million lawsuit against former CEO over alleged failure to prevent fraud by an employee\u00a0"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">A shareholder of game developer and publisher&nbsp;<strong>GungHo Online Entertainment<\/strong>&nbsp;has requested that the company file a lawsuit against its former CEO Kazuki Morishita&nbsp;(now chairman and chief development officer). They allege that while serving as the company&#8217;s president, Morishita failed&nbsp;to establish&nbsp;adequate internal controls, which resulted in misconduct by a&nbsp;former employee&nbsp;and,&nbsp;by extension, significant financial losses.&nbsp;The request seeks&nbsp;356 million yen (about $2.25 million USD) in damages, plus delay damages.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The matter was first reported by <a href=\"https:\/\/toyokeizai.net\/articles\/-\/962887?display=b\" target=\"_blank\" rel=\"noopener\">Toyo Keizai<\/a> on October 30, which identified the shareholder as the\u00a0Hong Kong-based activist hedge\u00a0fund LIM Advisors. GungHo subsequently confirmed\u00a0that it had received the request\u00a0in a <a href=\"https:\/\/ssl4.eir-parts.net\/doc\/3765\/tdnet\/2903465\/00.pdf\" target=\"_blank\" rel=\"noopener\">notice to shareholders<\/a>\u00a0posted on November 2. The company says it has not yet decided whether to file the requested lawsuit. GungHo&#8217;s\u00a0auditors and supervisory board members will first investigate the\u00a0matter\u00a0and consider how to respond.\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To provide some background, the request by LIM Advisors is related to <a href=\"https:\/\/automaton-media.com\/en\/news\/former-gungho-employee-arrested-after-allegedly-issuing-fake-work-orders-to-himself-to-siphon-company-funds\/\" target=\"_blank\" rel=\"noopener\">a series of fraudulent activities carried out by a former GungHo employee<\/a>, which the company publicly disclosed&nbsp;back&nbsp;in August 2025. The former employee, who had served as head of the company&#8217;s systems division, was fired and&nbsp;arrested in July 2026 on suspicion of breach of trust.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">According to police reports from the time, the former&nbsp;employee&nbsp;allegedly used an online outsourcing platform between January and December 2022 to create accounts under false names, posing as an independent contractor. He then arranged for GungHo to place fictitious work orders (such as requests to&nbsp;investigate&nbsp;product defects), and had the company transfer approximately 40 million&nbsp;yen in outsourcing fees to his false accounts across 12 separate payments.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">GungHo&nbsp;then&nbsp;conducted its own internal investigation, which uncovered that the misconduct had been going on for an even longer time. Between 2017 and 2025, the former employee allegedly used similar methods to pocket approximately 246 million&nbsp;yen&nbsp;(around $1.6 million&nbsp;USD) from the company, misappropriating most of the money. The investigation also identified other irregularities, including approximately 100 million&nbsp;yen in company funds being improperly transferred to business partners as outsourcing fees despite no actual work having been performed. &nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The shareholder&nbsp;thus seeks&nbsp;to hold Morishita responsible for the damage caused by these incidents, arguing that he failed to fulfill his duty to establish an appropriate internal control system during his tenure as president.&nbsp;Whether GungHo will actually take legal action remains to be seen. &nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Related: <a href=\"https:\/\/automaton-media.com\/en\/news\/japanese-gacha-giant-gungho-gets-new-ceo-following-months-of-pressure-from-activist-investors-lowers-presidential-salary\/\" target=\"_blank\" rel=\"noreferrer noopener\">GungHo gets new CEO following months of pressure from activist investors, lowers presidential salary<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The former CEO, Kazuki Morishita, is currently GungHo&#8217;s chairman and chief development officer (CDO).<\/p>\n","protected":false},"author":55,"featured_media":69342,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_gspb_post_css":"","autoblue_enabled":true,"autoblue_custom_message":"","autoblue_shares":[{"did":"did:plc:uzrrhkfyjrfdsynj2voztcf2","date":"2026-11-03T05:25:29+00:00","uri":"at:\/\/did:plc:uzrrhkfyjrfdsynj2voztcf2\/app.bsky.feed.post\/3mzf3yu7lf42o","response":"{\"uri\":\"at:\/\/did:plc:uzrrhkfyjrfdsynj2voztcf2\/app.bsky.feed.post\/3mzf3yu7lf42o\",\"cid\":\"bafyreiaqqgoa7xip727ujitjsp5euw53zutlfkfztuknkmpki25felmz4e\",\"commit\":{\"cid\":\"bafyreihbvrqlvcaftirihcb2u4z3msw7nsqlskpbdc2bjlfj2bfqqicyya\",\"rev\":\"3mzf3yu7qbe2o\"},\"validationStatus\":\"valid\"}"}],"autoblue_post_url":"","autoblue_publish_document":false,"footnotes":""},"categories":[3],"tags":[17],"class_list":["post-74665","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-japan-related-news"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":8}},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.7 - 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AUTOMATON WEST","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/automaton-media.com\/en\/news\/activist-investor-calls-on-game-publisher-gungho-to-file-2-25-million-lawsuit-against-former-ceo-over-alleged-failure-to-prevent-fraud-by-an-employee\/","og_locale":"en_US","og_type":"article","og_title":"Activist investor calls on game publisher\u00a0GungHo to file $2.25 million lawsuit against former CEO over alleged failure to prevent fraud by an employee\u00a0 - AUTOMATON WEST","og_description":"The former CEO, Kazuki Morishita, is currently GungHo's chairman and chief development officer (CDO).","og_url":"https:\/\/automaton-media.com\/en\/news\/activist-investor-calls-on-game-publisher-gungho-to-file-2-25-million-lawsuit-against-former-ceo-over-alleged-failure-to-prevent-fraud-by-an-employee\/","og_site_name":"AUTOMATON WEST","article_published_time":"2026-11-03T05:25:24+00:00","article_modified_time":"2026-11-03T05:25:25+00:00","og_image":[{"width":1045,"height":663,"url":"https:\/\/automaton-media.com\/en\/wp-content\/uploads\/2026\/07\/20260708-69339-header.jpg","type":"image\/jpeg"}],"author":"Amber V","twitter_card":"summary_large_image","twitter_creator":"@AUTOMATON_ENG","twitter_site":"@AUTOMATON_ENG","twitter_misc":{"Written by":"Amber V","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"NewsArticle","@id":"https:\/\/automaton-media.com\/en\/news\/activist-investor-calls-on-game-publisher-gungho-to-file-2-25-million-lawsuit-against-former-ceo-over-alleged-failure-to-prevent-fraud-by-an-employee\/#article","isPartOf":{"@id":"https:\/\/automaton-media.com\/en\/news\/activist-investor-calls-on-game-publisher-gungho-to-file-2-25-million-lawsuit-against-former-ceo-over-alleged-failure-to-prevent-fraud-by-an-employee\/"},"author":{"name":"Amber V","@id":"https:\/\/automaton-media.com\/en\/#\/schema\/person\/fdc6517a00e35b6917ffdb02e8b574d9"},"headline":"Activist investor calls on game publisher\u00a0GungHo to file $2.25 million lawsuit against former CEO over alleged failure to prevent fraud by an employee\u00a0","datePublished":"2026-11-03T05:25:24+00:00","dateModified":"2026-11-03T05:25:25+00:00","mainEntityOfPage":{"@id":"https:\/\/automaton-media.com\/en\/news\/activist-investor-calls-on-game-publisher-gungho-to-file-2-25-million-lawsuit-against-former-ceo-over-alleged-failure-to-prevent-fraud-by-an-employee\/"},"wordCount":460,"commentCount":0,"publisher":{"@id":"https:\/\/automaton-media.com\/en\/#organization"},"image":{"@id":"https:\/\/automaton-media.com\/en\/news\/activist-investor-calls-on-game-publisher-gungho-to-file-2-25-million-lawsuit-against-former-ceo-over-alleged-failure-to-prevent-fraud-by-an-employee\/#primaryimage"},"thumbnailUrl":"https:\/\/automaton-media.com\/en\/wp-content\/uploads\/2026\/07\/20260708-69339-header.jpg","keywords":["News (Japan-related)"],"articleSection":["News"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/automaton-media.com\/en\/news\/activist-investor-calls-on-game-publisher-gungho-to-file-2-25-million-lawsuit-against-former-ceo-over-alleged-failure-to-prevent-fraud-by-an-employee\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/automaton-media.com\/en\/news\/activist-investor-calls-on-game-publisher-gungho-to-file-2-25-million-lawsuit-against-former-ceo-over-alleged-failure-to-prevent-fraud-by-an-employee\/","url":"https:\/\/automaton-media.com\/en\/news\/activist-investor-calls-on-game-publisher-gungho-to-file-2-25-million-lawsuit-against-former-ceo-over-alleged-failure-to-prevent-fraud-by-an-employee\/","name":"Activist investor calls on game publisher\u00a0GungHo to file $2.25 million lawsuit against former CEO over alleged failure to prevent fraud by an employee\u00a0 - 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