Activision Blizzard pays $35mn SEC settlement over workplace complaints

Activision Blizzard, the maker of popular video games including Call of Duty, has agreed to pay a $35mn fine to settle charges relating to its handling of workplace discrimination and harassment allegations.

In a statement on Friday, the Securities and Exchange Commission said that the company had been aware between 2018 and 2021 that its business units lacked the controls and procedures needed to collect and assess employee complaints about workplace misconduct.

As a result, its 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”, the SEC said.

Activision, which is facing a separate lawsuit from US regulators seeking to stop its $75bn sale to Microsoft, faced a staff walkout in 2021 after its management dismissed allegations in a California lawsuit that it had harboured a “frat boy” culture as “inaccurate”.

Later that year, chief executive Bobby Kotick apologised for the “tone deaf” response as the company told staff that it had fired 20 employees and reprimanded another 20 in an effort to build a “more accountable workplace”. The company also last year agreed an $18mn settlement with the Equal Employment Opportunity Commission, a federal agency that oversees civil rights issues in the workplace, regarding claims of sexual harassment, pregnancy discrimination and related issues.

The SEC’s seven-page order found that Activision had signed separation agreements with staff leaving the company requiring them to tell the company if they received any request for information from SEC staff, in violation of whistleblower protection rules.

“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,” he added. The SEC said it was not aware of any specific examples of former Activision employees being prevented from communicating with its staff, however.

An Activision spokesman said it was pleased to have resolved the matter amicably. “As the order recognises, we have enhanced our disclosure processes with regard to workplace reporting and updated our separation contract language,” he added. “Activision Blizzard is confident in its workplace disclosures.”

Activision shares were down less than 1 per cent at $76.59 in early trading. The company is due to report fourth-quarter earnings next week.