SEC Investigating Activision Blizzard Regarding Improper Disclosures of Sexual Misconduct and Discrimination
2021/09/20 at 3:28 PM
The U.S. Securities and Exchange Commission (SEC) has been added to the list of agencies investigating Activision Blizzard. As reported by
The Wall Street Journal
, the SEC is requesting information to discern whether Activision and its executives properly disclosed allegations of sexual harassment or discrimination with investors.
The U.S. Securities and Exchange Commission is an independent federal agency which enforces the law against market manipulation.
So far, several Activision Blizzard senior executives have been subpoenaed, including CEO Bobby Kotick, and the SEC has requested board meeting minutes, six former employee's personnel files, and previous separation agreements, along with correspondence between senior executives regarding complaints of sexual harassment or discrimination by Activision employees or contractors. Activision spokesperson Helaine Klasky confirmed that the SEC’s investigation concerns “the company’s disclosures regarding employment matters and related issues,” and that the company is cooperating with the SEC, though an SEC spokesperson declined to comment.
In late July, we reported that several
investor rights law firms had launched securities claims investigations
against Activision Blizzard after
news of the lawsuit broke
. As a publicly traded company, Activision is required to issue regular material statements about what is happening within their business which may impact shareholder value and the resulting stock price, so that the investing public can make reasoned and informed decisions about whether to buy or sell their public shares. While those firms are akin to sophisticated ambulance chasers looking to cash in on high value investors (those who trade in the tens of thousands of dollars), the SEC has a greater legal and regulatory range to decide if Activision breached their fiduciary duties in not disclosing the ongoing problems within their workplace.
It is key to keep in mind however, that the allegations and lawsuit largely revolve around the affairs of Blizzard Entertainment (the studio) and not Activision Blizzard (the corporate parent), so it's hard to say exactly how involved the senior executives may have been with the allegations and
separation of employees like Alex Afrasiabi
. While that isn't to say that there may not have been wrongdoing within their other sub studios, the current allegations do not stretch all the way to the top of Activision's senior executive branch, nor across its wide range of dozens of subsidiaries. The extent of these issues and how aware of them the senior leadership was is precisely what the SEC's investigation seeks to determine however, and if found in violation, the company could face serious fines and penalties or even criminal charges if anything exceptionally egregious is found. That said, the most likely result is finding Activision Blizzard in gross negligence due to not properly following up on employee allegations, rather than intentionally creating a hostile work environment, so the likelihood of criminal charges in this case is fairly low.
AVTI's stock price has continued to drop since news of the lawsuit first broke in late July.
The Activision spokeswoman, Ms. Klasky, went on to echo the
Bobby Kotick's words
during the most recent
quarterly investor earnings call
, saying that Activision is deeply committed to making the company one of the best, most inclusive places to work.
We have made and are making a number of important changes to improve our policies and procedures to ensure that there is no place anywhere in our company for discrimination, harassment or unequal treatment of any kind.
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