Activision Blizzard settles whistleblower protection violation charge

Without admitting or denying claims, Activision Blizzard has agreed to pay $35 million to settle charges that it failed to implement necessary rules to address workplace misconduct.

The company failed to maintain disclosure controls and procedures to ensure that the company could assess whether its disclosures pertaining to its workforce were adequate, according to the U.S. Securities and Exchange Commission (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.

According to the SEC order, between 2018 and 2021, the company 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.

Last year, a federal court approved Activision Blizzard’s settlement with the Equal Employment Opportunity Commission (EEOC) relating to sexual harassment and discrimination in the workplace.

In 2021, Activision Blizzard chief executive Bobby Kotick apologized for the company’s response to a California discrimination lawsuit, hours before hundreds of employees staged a walkout to protest the gaming giant’s alleged “frat boy” work culture.

Whistleblower protection violation

Meanwhile, SEC’s order also noted that, between 2016 and 2021, Activision Blizzard executed separation agreements in the ordinary course of its business which requires former employees to provide notice to the company if they received a request for information from the Commission’s staff. This violated a commission whistleblower protection rule, according to the SEC.

“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.” said Burt.

The SEC’s order finds that Activision Blizzard violated Exchange Act Rules 13a-15(a) and 21F-17(a).

In January last year, Microsoft announced it will acquire Activision Blizzard for $95.00 per share, in an all-cash transaction valued at $68.7 billion. Activision Blizzard's talent pool is expected to benefit from the merger, said CEO Bobby Kotick.