Sept. 1 (Bloomberg) -- Take-Two Interactive Software Inc. agreed to pay $20.1 million to settle a lawsuit that included claims that the company defrauded buyers of “Grand Theft Auto: San Andreas” by failing to disclose the video game has explicit sexual content.

The company’s insurers will pay $15.2 million, and the company will pay $4.9 million, Take-Two said in a statement announcing the accord today in Manhattan federal court. The New York-based company has “fully accrued for its portion of the settlement costs,” according to the statement.

The class-action, or group, lawsuit was filed in 2005. The plaintiffs said in the case that they bought the game not knowing it contained hidden sex scenes that could be viewed by using software downloaded from the Internet. A judge must approve the settlement.

In July 2005, shortly before the suit was filed, Take-Two said it had stopped making the then-current version of the game and was working on one that would block the software used to view the scenes. The game’s rating had been upgraded to warn users of the sexual content.

The settlement also resolves claims by investors that the company improperly backdated stock options, Take-Two said. The company was accused of granting key employees options backdated to days of historically low closing prices. Take-Two restated financial results after overstating income or understating losses from 1997 through 2005 with backdated options.

David Nester, a lawyer for the plaintiffs, didn’t immediately return a call.

The case is In Re Grand Theft Auto Video Game, 06-MD-1739, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David Glovin in New York federal court at dglovin@bloomberg.net.

Last Updated: September 1, 2009 17:56 EDT