On February 3, 2023, the U.S. Securities and Exchange Commission (SEC or the “Commission”) announced a settled enforcement action involving Activision Blizzard, the maker of popular video games Call of Duty, World of Warcraft and Candy Crush. The company agreed to pay $35 million to settle novel allegations that it failed to maintain disclosure controls related to tracking workplace complaints and, separately, that language in the company’s separation agreements with departing employees violated one of the SEC’s whistleblower protection rules. Activision Blizzard allegedly failed to collect and evaluate employee workplace complaints, which prevented management from having adequate information to assess whether its public disclosures concerning its workforce were “fulsome, accurate, and not misleading by omission.” The SEC found this conduct to be a violation of Exchange Act Rule 13a-15(a), which requires Activision Blizzard to maintain “disclosure controls and procedures.”
The “S” in ESG Matters, Too – SEC and Activision Blizzard Reach $35 Million Settlement over Disclosure Controls
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