Activision Blizzard has reached an agreement with the SEC to pay a $35 million fine over disclosure controls and whistleblower violations.
Activision Blizzard faced multiple accusations of sexual harassment and misconduct that went on for some time, with CEO Bobby Kotick accused of knowing about the issues, but choosing to ignore them. The SEC also accused the company of lacking the necessary disclosure controls to properly ascertain the scope of the issue.
According to the SEC’s order, between 2018 and 2021, Activision Blizzard was aware that its ability to attract, retain, and motivate employees was a particularly important risk in its business, but it lacked controls and procedures among its separate business units to collect and analyze employee complaints of workplace misconduct. As a result, the company’s management lacked sufficient information to understand the volume and substance of employee complaints about workplace misconduct and did not assess whether any material issues existed that would have required public disclosure.
In addition to its lack of necessary disclosure controls, Activision Blizzard is accused of violating whistleblower protection laws over a period of more than five years.
Separately, the SEC’s order finds that, between 2016 and 2021, Activision Blizzard executed separation agreements in the ordinary course of its business that violated a Commission whistleblower protection rule by requiring former employees to provide notice to the company if they received a request for information from the Commission’s staff.
As part of its settlement, the company has agreed to pay a $35 million fine.
“The SEC’s order finds that Activision Blizzard failed to implement necessary controls to collect and review employee complaints about workplace misconduct, which left it without the means to determine whether larger issues existed that needed to be disclosed to investors,” said Jason Burt, Director of the SEC’s Denver Regional Office. “Moreover, taking action to impede former employees from communicating directly with the Commission staff about a possible securities law violation is not only bad corporate governance, it is illegal.”