Activision Blizzard Inc., a company that develops and publishes video games, has agreed to pay $35 million to settle charges that it failed to maintain disclosure controls and procedures to ensure that the company could determine whether its disclosures pertaining to its workforce were adequate.
Activision Blizzard Slammed
The settlement was announced today by the Securities and Exchange Commission (SEC), which stated that the company would pay the amount to settle the allegations. The company also resolved allegations that it had breached a whistleblower protection rule administered by the SEC.
Activision Blizzard was aware that its ability to attract, retain, and motivate employees was a particularly important risk in its business between the years of 2018 and 2021, as stated in the order issued by the SEC; however, the company did not have controls and procedures in place across its separate business units in order to collect and evaluate employee complaints of workplace misconduct.
As a consequence of this, the management of the company did not have sufficient information to understand the volume and substance of employee complaints about misconduct in the workplace, and they did not conduct an assessment to determine whether or not there were any material issues that required public disclosure.
Separately, the order from the SEC finds that Activision Blizzard violated a rule regarding the protection of whistleblowers when it required former employees to notify the company if they received a request for information from the staff of the Commission between the years of 2016 and 2021. This violation occurred in the ordinary course of business at Activision Blizzard.
Jason Burt, the Director of the Denver Regional Office of the SEC, says, “The order finds that Activision Blizzard failed to implement necessary controls to collect and review employee complaints about workplace misconduct.”
As a result, the company was unable to determine whether larger problems existed that needed to be disclosed to investors. The SEC’s order finds that Activision Blizzard failed to implement necessary controls to collect and review employee complaints about workplace misconduct.” In addition, “taking action to impede communication between former employees and staff members of the Commission about a possible violation of securities law is not only poor corporate governance, it is illegal.
Activision Blizzard has been found to have violated Exchange Act Rules 13a-15(a) and 21F-17, according to an order issued by the SEC (a). Activision Blizzard agreed to a cease-and-desist order and to pay a $35 million penalty, but the company did not admit or deny the findings that the SEC presented.
Eric J. Day, Yamini Piplani Grema, and Daniel M. Konosky of the SEC’s Denver Regional Office led the investigation, with assistance from Helena Engelhart Bean of that office. The investigation was conducted by the SEC. Danielle R. Voorhees and Mr. Burt, both of the Denver Regional Office, served as the investigation’s supervisors throughout its entirety.
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