The U.S. Securities and Exchange Commission is investigating Activision Blizzard over its handling of allegations of sexual harassment and gender-based discrimination, the video game publisher confirmed to The Washington Post on Monday.
The SEC has subpoenaed the company and several current and former employees, according to Activision Blizzard. In a statement, the company said it was cooperating with the investigation.
Activision Blizzard is one of the world’s biggest gaming companies, with 9,500 employees worldwide, a market capitalization of more than $60 billion and hit franchises like Call of Duty and World of Warcraft.
One of Activision’s largest subsidiaries, Blizzard Entertainment, founded in 1991, was named extensively in a lawsuit filed by California’s Department of Fair Employment and Housing (DFEH) over claims of widespread sexual harassment and gender-based discrimination. The DFEH sued Activision Blizzard in July, alleging the company had a “frat boy culture.” It was followed by a class-action suit from shareholders in August that claimed the company had violated federal securities laws.
“The SEC is investigating ‘whether’ any material information was withheld from investors, but it isn’t likely they will find anything unless we learn of new facts that implicate the heads of their various studios,” said Michael Pachter, an analyst at Wedbush Securities. “I just don’t see an SEC investigation uncovering much more than we already know.”
The SEC declined to comment.
Last week, Activision Blizzard employees and the Communications Workers of America (CWA), a major media labor union, filed an unfair labor practice lawsuit against Activision Blizzard accusing the video game company of worker intimidation and union busting. The union claims Activision Blizzard is using coercive tactics to stop employees from unionizing. On the same day, while not commenting on the unfair labor suit, the company announced the hiring of two new senior executives: Julie Hodges, a human resources executive from Disney, as chief people officer and Sandeep Dube, former revenue management executive at Delta Air Lines, as chief commercial officer.
Inside the Activision Blizzard lawsuit
On July 20, California’s Department of Fair Employment and Housing (DFEH) filed a lawsuit against video game publisher Activision Blizzard, alleging widespread, gender-based discrimination and sexual harassment. Here’s what you need to know:
- The lawsuit followed an investigation by the DFEH that began in 2018 in response to complaints from Activision Blizzard employees. Activision Blizzard disputes the allegations, saying the lawsuit’s claims were “distorted, and in many cases false.”
- 17 current and former employees interview by The Post detailed a workplace culture where women faced multiple incidents of harassment from men in leadership positions, and alcohol was free-flowing.
- A Nov. 16 report from The Wall Street Journal alleged that Activision Blizzard CEO Bobby Kotick was aware of sexual misconduct allegations at the company but did not inform the board of directors. The report resulted in an employee walkout, a letter from an Activision shareholder group and a petition signed by employees demanding the resignation of several executives, including Kotick.
- The DFEH lawsuit alleges that J. Allen Brack, the president of Blizzard Entertainment, was personally aware of employee complaints of sexual harassment directed at men with senior positions at the company. It also alleges he did not effectively mitigate those issues. Brack stepped down from his position as president on Aug. 3. The same day, Activision Blizzard confirmed that an executive in Blizzard’s human resources department was no longer with the company.
- In response to the lawsuit and the ensuing statements of company leaders, Activision Blizzard employees wrote an open letter to the company’s leadership on July 26, rebuking them what they perceived to be an “abhorrent and insulting” response to the lawsuit. Employees also organized a walkout July 28.
- Several sponsors for Activision Blizzard-run esports leagues have pulled back advertising, The Post reported Aug. 5.
- Content creators on Twitch and YouTube who often feature games made by Activision Blizzard have wrestled with how to approach the topic on their streams and videos.
- Legal experts are interested in the outcome of the lawsuit, noting that the DFEH is highly selective in the cases it chooses to fight in court and that the suit could set a precedent for California labor law.
- The U.S. Securities and Exchange Commission is also investigating Activision Blizzard, and has subpoenaed the company and several current and former employees. In a statement, Activision Blizzard said it was cooperating with the investigation.
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