Activision Blizzard will pay $35 million fine for violating whistleblower protection rule and disclosure flaws  

US based Activision Blizzard, one of the world’s biggest video game companies, has been fined by the US Securities and Exchange Commission (SEC) a hefty sum of $35 million. The Activision Blizzard fine settles charges for failing to maintain disclosure controls related to complaints of workplace misconduct and violating a whistleblower protection rule. 

Allegations of workplace misconduct and sexual harassment 

In November 2021, the SEC began investigating Activision Blizzard to determine whether its executives properly disclosed allegations of workplace misconduct with investors. This came after the company was being sued by the California Department of Fair Employment and Housing for sexual harassment and discrimination against female employees. 

In their report, the SEC found that Activision Blizzard lacked procedures to collect and analyse employee complaints of workplace misconduct. As a result, the company did not assess whether any material issues existed that would have required public disclosure. The Commission also found that Activision Blizzard violated a whistleblower protection rule by executing agreements requiring former employees to provide notice to the company if they received a request for information from the SEC.  

Unfortunately, the fine against Activision Blizzard does not go towards the actual victims of workplace discrimination 

According to the SEC, Activision Blizzard was aware that its ability to attract and motivate employees was a particularly important risk in their industry. Still, the company lacked controls and procedures to collect and analyse complaints of workplace misconduct. As a result, the company’s management lacked sufficient information to understand the volume and substance of employee complaints.  

As the SEC is regulatory in nature, it is responsible for civil enforcement and administrative actions, rather than criminal wrongdoing. The investigation is not about whether discrimination actually took place, but whether the company had adequate controls and procedures to disclose those issues to their shareholders.  

The whistleblower fine is another strike against Activision Blizzard’s already tarnished reputation 

Microsoft announced its intent to acquire Activision Blizzard for $68.7 billion in January 2022. If approved, it would make Microsoft the third largest gaming company in the world. The upcoming sale is still pending regulatory and shareholder approval. It is important for shareholders to be informed of what is happening within the company, as it may change their perception of how the executive leadership is performing in their duties.  

In conclusion, Activision Blizzard’s failure to maintain disclosure controls related to complaints of workplace misconduct and violation of a whistleblower protection rule have resulted in a $35 million cease-and-desist penalty. The lack of procedures to collect and analyse employee complaints as well as the violation of the whistleblower protection rule are serious issues that need to be addressed by Activision Blizzard to ensure a safe and transparent workplace for all employees.

Want to know more? Keep reading our blog to find out the latest news and corporate best practices!

Would you like to learn more about a whistleblowing service and safe internal reporting channels? You can learn more about Whistlelink’s all-in-one solution here or book a free demo!