Activision Blizzard has been charged $35 million by the U.S. Securities and Exchange Commission (SEC) for “failing to maintain disclosure controls related to complaints of workplace misconduct and violating whistleblower protection rule.”
The SEC shared the news in a press release, stating Activision Blizzard agreed to pay the $35 million to settle its violations, and the charges stemmed from issues dating back to 2016.
“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,” The SEC wrote.
Between 2016 and 2021, the SEC stated Activision Blizzard also “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 a result, Activison Blizzard was said to have violated Exchange Act Rules 13a-15(a) and 21F-17(a). The company did not admit or deny the SEC’s finding, instead it just “agreed to a cease-and-desist order and to pay a $35 million penalty.”
“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.”
The SEC confirmed it was investigating how Activision Blizzard handled allegations of sexual misconduct and workplace discrimination in September of 2021. The SEC’s search followed the two-year investigation by the California Department of Fair Employment and Housing that led to a lawsuit against the company for fostering a “frat boy” culture in which female employees were allegedly subjected to unequal pay and sexual harassment.
This settlment also comes at a time when there is extra scrutiny regarding the $68.7 billion deal that would merge Xbox and Activision Blizzard. Most recently, the merger spurred a formal antitrust warning from the European Union.
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