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Activision Blizzard has agreed to pay $35 million to settle SEC accusations that it violated federal securities laws by failing to sufficiently disclose how its poor response to workplace concerns was affecting its ability to acquire and retain skilled personnel.
The business was also chastised for breaking the SEC's whistleblower protection provision.
Activision Blizzard lacked the controls and procedures necessary to appropriately assess whether its inability to resolve multiple workplace sexual harassment accusations was impacting its ability to attract and retain qualified employees between 2018 and 21. As a result, the SEC claimed in its order, the business was unable to appropriately convey the scope of the problem in its disclosures.
“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, in a press release Friday.
The corporation responded by enacting "many company-wide structural changes and rules that strengthened the method in which employee complaints were required to be logged, kept, and relayed to the company's senior management and disclosure employees," according to the ruling. The modifications took place between May 2020 and May 2022.
According to the SEC, the alleged whistleblower rule violations involved language in employee separation agreements between 2016 and 21. Employees were required by the agreements to tell the corporation if they received any requests from administrative agencies regarding a report or complaint.
The statement violated the SEC's whistleblower protection rule, which permits whistleblowers to remain anonymous, according to the agency.
The agency stated that it was unaware of any former Activision Blizzard employee being barred from contacting it with information regarding a securities law violation or whether the business took any efforts to enforce the restriction. In early 2022, it was withdrawn from all agreements.
Employees at Activision Blizzard have long complained about the company's "frat guy culture," which reportedly allowed sexual harassment of female employees to occur without repercussions from management. In July 2021, the California Department of Fair Employment and Housing filed a complaint alleging that male employees habitually subjected female employees to obnoxious behaviour, including persistent, unwelcome sexual comments and advances and even rape jokes. According to the lawsuit, one female employee committed herself while on a business trip as a result of workplace sexual harassment.
Both lawsuits are still unresolved after the firm filed a countersuit.
As part of a $18 million settlement with the Equal Employment Opportunity Commission, Activision Blizzard agreed to change its culture to prevent sexual harassment, discrimination, and retaliation in September 2021.
Activision Blizzard agreed to a cease-and-desist order from further violations, without admitting or rejecting the SEC's charges.
“We are pleased to have amicably resolved this matter,” the company said in an emailed statement. “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.”
By fLEXI tEAM
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