Video game company Activision Blizzard will pay $35 million to settle the charges about how the company disclosed employee complaints about the workplace and alleged violations of whistleblower protection rules, the Securities and Exchange Commission (SEC) unveiled on Friday.
According to the SEC, between the 2018 and 2021, Activision Blizzard did not have proper procedures to collect and analyze employee complaints about workplace misconduct. This meant that company management did not understand the full scope of the issue, the SEC said, and “did not assess whether any material issues existed that would have required public disclosure.”
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The order also found that between 2016 and 2021, Activision Blizzard violated an SEC whistleblower protection rule by requiring former employees to disclose whether they had received a request for information from the SEC in their separation agreement.
Activision Blizzard also agreed to a cease and desist order on these practices, according to the SEC.
“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.”
Activision said in a statement: “We are pleased to have amicably resolved this matter. As the order recognizes, we have enhanced our disclosure processes with regard to workplace reporting and updated our separation contract language. We did so as part of our continuing commitment to operational excellence and transparency. Activision Blizzard is confident in its workplace disclosures.”
In early 2022, technology giant Microsoft agreed to acquire the video game publisher in a $68.7 billion deal that would reshape the gaming landscape. If completed, it would bring together the owner of the Xbox game platform and Xbox Game Studios (owner of Bethesda Softworks and 343 Industries, among other game publishers) and Activision, maker of the Call of Duty, Warcraft and Tony Hawk franchises, among others.
