Back on June 21 of this year, the state of California sued Activision Blizzard for gender discrimination. The lawsuit brought to light the fact that the company hosts a toxic workplace environment for female employees, one described as embodying a "frat-boy culture." For years, the company has apparently normalized sexual harassment, unfair compensation, unbalanced workloads, unreasonable termination, and biased promotions. The lawsuit comes after a two-year investigation into these claims.
Now, as if the lawsuit and the public outcry following it weren't enough for Blizzard to deal with, the company's investors have decided to add fuel to the fire. Said investors have decided to file a class-action lawsuit against Blizzard, employing Rosen Law Firm to speak on their behalf, the same company that sued CD Projekt Red over the disastrous launch of Cyberpunk. And considering the current state of affairs Blizzard finds itself dealing with, the lawsuit has a very good chance of succeeding.
The suit claims that Blizzard's leadership, specifically Activision's CEO Bobby Kotick, CFO Dennis Durkin, and former CFO Spencer Neumann, knowingly made misleading and false statements regarding the quality of the company. The suit claims that Blizzard knew it featured a hostile work environment for women, but it chose not to disclose this information to those who may have an interest in investing in the company, something it's legally obligated to do. As a result, Blizzard essentially tricked investors into funding the company, fraudulently inflating its own stock value beyond what it actually is.
The unlawful, misleading statements that the suit contests come by way of Blizzard's annual SOX certifications, specifically the ones released between 2016 and now. For those unaware, SOX certifications are documentation that publicly traded companies are legally required to use in order to inform the public of any potential audits, legal issues, or procedures that may impact the value of the business. Simply put, they warn potential investors of what they're getting into.
The last four certifications Blizzard has released state that the only lawsuits the company foresees itself dealing with are routine ones, like tax matters and intellectual property rights. As such, Blizzard's management stated that it doesn't believe it'll run into any problems that would cause a material adverse effect on Blizzard's business, financial condition, results of operations, or liquidity lawsuits. Thanks to California's lawsuit, however, management's statements don't seem true to investors, as management must have known about the several damaging workplace culture habits happening under its watch.
Source: Kotaku