Activision Blizzard will pay a $35M fine to the SEC

The U.S. Securities and Exchange Commission's investigation into Activision Blizzard has ended with a $35 million payment to the SEC to settle charges that Activision Blizzard violated government rules for the protection of whistleblowers and for failure to disclose information to investors. The settlement's terms state that it is neither an admission of guilt, nor a denial, by Activision Blizzard.

The SEC's investigation started in 2021, when the state of California's Civil Rights Department filed a lawsuit against Activision Blizzard over a pervasive culture of sexual harassment. That lawsuit's allegations prompted an investigation from both the SEC and the United States' Equal Employment Opportunity Commission. The EEOC investigation ended in a lawsuit which was settled for $18 million in 2021.

The alleged behavior took place over years, from 2016 for the separation agreements which did not protect whistleblowers, and from 2017 for the information disclosures. Activision Blizzard changed those practices over the course of 2020 to 2022. The $35 million fine represents just over 0.5% of Activision Blizzard's 2022 gross profits of $6.486 billion, or 0.11% of its gross profits from 2016 to 2022.

What sets the SEC investigation apart is that it wasn't about sexual harassment or workplace misconduct, but how Activision Blizzard internally analyzes and reports that information, then discloses those reports to investors. It also looked into the separation agreements employees signed when leaving the company, which had a clause mandating that departing workers tell Activision Blizzard if they intended to disclose information to government agencies.

A news release by SEC regional office director Jason Burt about the settlement and ordered payment said 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."

The SEC further stated that Activision Blizzard's “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.”

In a statement to Polygon, Activision Blizzard spokesperson Joe Christinat said the company was "pleased" to resolve the investigation amicably: "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."