SEC investigating Activision Blizzard over workplace practices, disclosures

Agency has issued subpoena to videogame company and several executives including CEO Bobby Kotick

Federal securities regulators have launched a wide-ranging investigation into Activision Blizzard Inc., including how the videogame-publishing giant handled employees’ allegations of sexual misconduct and workplace discrimination, according to people familiar with the investigation and documents viewed by The Wall Street Journal.

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The Securities and Exchange Commission has subpoenaed Activision, known for its Call of Duty, World of Warcraft and Candy Crush franchises, and several of its senior executives, including longtime chief executive Bobby Kotick, according to the people and documents.

ACTIVISION BLIZZARD SLAPPED WITH NEW ALLEGATIONS OF WORKER INTIMIDATION, UNION BUSTING

The agency is asking for documents including minutes from Activision board meetings since 2019, personnel files of six former employees and separation agreements the company has reached this year with staffers, records show. The SEC is asking for Mr. Kotick’s communications with other senior executives regarding complaints of sexual harassment or discrimination by Activision employees or contractors, the documents show.

An Activision spokeswoman, Helaine Klasky, on Monday confirmed that the SEC’s investigation concerns "the company’s disclosures regarding employment matters and related issues," adding that the agency has subpoenaed several current and former employees. 

"The company is cooperating with the SEC," the spokeswoman said.

An SEC spokeswoman declined to comment.

The probe by the SEC significantly ratchets up the regulatory pressure on Activision, the largest U.S. videogame publisher by market capitalization. The SEC is requesting information to discern whether Activision and its executives properly disclosed allegations of workplace harassment and gender-pay issues, and whether any of that information should have been shared earlier with investors and other parties, according to the documents and people familiar with the investigation.

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The California Department of Fair Employment and Housing sued Activision in late July alleging the company paid women less than their male counterparts and provided them with fewer opportunities to advance. The agency also alleged that Activision ignored complaints by female employees of sexual harassment, discrimination and retaliation and maintained a "frat-boy" culture, primarily at its Blizzard Entertainment unit.

Activision has said it would fight the charges from the California agency. It initially slammed the lawsuit, saying it included distorted, and in many cases false, descriptions of its past. Employees responded by planning walkouts, and Mr. Kotick said that Activision’s initial response was "tone deaf" and that the company had hired a law firm to investigate the complaints.

Separately, the Communications Workers of America filed charges earlier this month with the National Labor Relations Board against Activision, alleging worker intimidation. The charges include allegations that company management used coercive tactics to prevent its employees from exercising their rights to organize under federal law.

In a statement Monday, Ms. Klasky of Activision said the company has "made great efforts to respect the rights of all employees under the NLRB."

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The same day that the union filed charges, Activision said it hired two senior executives to help it build a more inclusive workplace and grow its revenue. Julie Hodges, a Walt Disney Co. executive, was named chief people officer and Sandeep Dube, a Delta Air Lines Inc. executive, was named chief commercial officer. Ms. Hodges, who had oversight of compensation, benefits and talent acquisition at Disney, is filling the human-resources-chief role being vacated by Claudine Naughton.

Ms. Klasky said in a statement in response to questions about the SEC probe that Activision is deeply committed to making the company one of the best, most inclusive places to work.

"We have made and are making a number of important changes to improve our policies and procedures to ensure that there is no place anywhere in our company for discrimination, harassment or unequal treatment of any kind," the statement said.

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