Activision Blizzard to Pay $35 Million in SEC Settlement
03.02.2023 um 13:26
Activision Blizzard has agreed to pay a $35 million fine in order to settle regulatory claims with the U.S. Securities and Exchange Commission. First
reported in November 2021
, the SEC began investigating Activision Blizzard to discern whether its executives properly disclosed allegations of workplace misconduct with investors, following the revelation that the company was being
sued for sexual harassment and discrimination
by the California Department of Fair Employment and Housing.
, the SEC noted that Activision Blizzard lacked procedures to collect and analyze employee complaints of workplace misconduct, and as a result did not assess whether any material issues existed that would have required public disclosure. Separately, the Commission also found that Activision Blizzard violated a whistleblower protection rule by requiring former employees to provide notice to the company if they received a request for information from the SEC - a rule which exists to ensure employees aren't prevented from informing regulators about wrongdoing.
Securities and Exchange Commission
“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’s order finds that Activision Blizzard violated Exchange Act Rules 13a-15(a) and 21F-17(a). Without admitting or denying the SEC’s findings, Activision Blizzard agreed to a cease-and-desist order and to pay a $35 million penalty.
As reported by the
Wall Street Journal
, a spokesperson for Activision said the company was pleased to have amicably resolved the matter and was confident in its workplace disclosures.
The Wall Street Journal
“As the order recognizes, we have enhanced our disclosure processes with regard to workplace reporting and updated our separation contract language,” he said. “We did so as part of our continuing commitment to operational excellence and transparency.”
Unfortunately, this fine does not go towards the actual victims of workplace discrimination. Unlike the
$18 million settlement with the EEOC
last year, it's important to recognize that the SEC is regulatory in nature - responsible for civil enforcement and administrative actions, rather than criminal wrongdoing - so their investigation is not about whether discrimination actually took place, but whether the company had adequate controls and procedures to disclose those issues to their shareholders. As these shareholders vote on corporate actions, its important that they be informed of what is happening within the company, as it may change their perception of how the executive leadership are performing in their duties.
While that may not be much comfort to those who see this fine as yet another slap on the wrist compared to
Microsoft's $69 billion acquisition
of the company, it is yet another strike against the company's greatly tarnished reputation as the Federal Trade Commission and other regulators around the world decide whether to attempt to block or approve the upcoming sale.
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