Video game developer Activision Blizzard agreed to pay a $35 million settlement over charges it failed to maintain “adequate” controls for collecting and assessing reports of workplace misconduct and that it violated federal whistleblower protection rules, the Securities and Exchange Commission said Friday.
The SEC claimed workplace misconduct complaints were neither collected nor analyzed as expected by public disclosure regulations. “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,” SEC director Jason Burt said.
The settlement is not an admission or denial of wrongdoing but concludes a probe that focused on Activision Blizzard’s standards from 2018 to 2021.
Activision Blizzard CEO Bobby Kotick was aware of reports of alleged sexual misconduct at the company, including alleged rape, the Wall Street Journal reported in 2021.
“Mr. Kotick would not have been informed of every report of misconduct at every Activision Blizzard company, nor would he reasonably be expected to have been updated on all personnel issues,” an Activision Blizzard spokesperson said at the time.
The SEC filing claimed Activision Blizzard required “a significant number” of departing employees who signed separation agreements to tell Activision Blizzard if regulators tried to contact them, or even if those employees wished to make a complaint of their own. Activision Blizzard’s requirement that ex-employees notify the company violated federal whistleblower protections, the SEC claimed.
The SEC noted that it wasn’t aware that of “any specific instances” where an employee was prevented from making a complaint or speaking to regulators.
The SEC order did not explicitly mention Kotick or sexual harassment claims by some employees. Activision Blizzard had been under SEC investigation over the company’s handling of sexual and personal harassment since 2021, the Journal previously reported.
“When the Company received complaints we responded to them appropriately and after the extensive and thorough reviews of workplace policies and procedures, workplace practices, compliance, and company data performed by an array of external company advisors including former EEOC Chair Gilbert Casellas, Skadden Arps, WilmerHale, Paul Hastings and CDF Labor Law LLP, the Board concluded there was never widespread or systemic harassment, retaliation or discrimination at the Company,” an Activision Blizzard spokesperson said. “The Board and advisors also concluded there was no evidence that the Company’s senior executives ignored complaints when they were reported.”
Activision took steps from 2020 to 2022 to enhance procedures for handling employee complaints, the SEC order noted.
“As the order recognizes, we have enhanced our disclosure processes with regard to workplace reporting and updated our separation contract language,” an Activision Blizzard spokesperson said on Friday.
The company settled an Equal Employment Opportunity Commission probe in March for $18 million over related claims of retaliation in connection with sexual harassment claims.
In December, the Federal Trade Commission moved to block Microsoft’s acquisition of Activision, which was announced in January 2022, claiming that the deal would violate federal antitrust laws.
Correction: The SEC said it settled with Activision Blizzard over failure to maintain “adequate” controls for assessing reports of workplace misconduct, not harassment.