Activision Blizzard will pay a $35 million fine over its failures to maintain proper workplace disclosure controls and violations of whistleblower protections, the United States Securities and Exchange Commission announced Friday. The SEC has been investigating Activision Blizzard over misconduct allegations for the past 15 months, with this development marking the official conclusion of that probe.

The proceedings were started after the company's home state charged it with violations of the California Fair Employment and Housing Act in summer 2021. According to the still-pending complaint, the gaming giant failed to ensure proper employee protections against workplace harassment and gender discrimination, which led to many women leaving the company. The SEC used California's lawsuit against Activision Blizzard to launch its own investigation meant to determine whether the firm's handling of the situation constituted a breach of its fiduciary duty to investors.

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According to the February 3 ruling, Activision Blizzard failed to implement mechanisms that would allow it to detect systemic workplace misconduct between 2018 and 2021. This state of affairs left the firm's management blissfully unaware of any structural issues that needed to be disclosed to investors, according to SEC Regional Director Jason Burt, who supervised the newly concluded investigation.

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The Commission also found that Activision Blizzard took preemptive action to hinder former employees from communicating with the federal investigators over a five-year period ending in 2021. Its legal department routinely drafted separation agreements requiring former staffers to notify Activision Blizzard about any information requests from the SEC. In doing so, it violated the regulator's whistleblower protection rule.

Apart from the $35 million fine, the company also accepted a cease-and-desist order over its anti-whistleblowing practices in order to settle the SEC's charges without admitting to any wrongdoing outlined in the Commission's report. It might have opted to fight the findings if it hadn't failed to have California's gender discrimination lawsuit dismissed late last year. However, with that situation now being destined to reach a courtroom, Activision Blizzard likely prioritized settling, as doing so meant avoiding a final admission of guilt that state prosecutors could later cite to bolster their own case.

Activision Blizzard is currently facing a separate lawsuit from the Federal Trade Commission that is seeking to block its $69 billion sale to Microsoft on antitrust grounds. The pre-trial hearings already started in January, with some industry sources still expecting the deal to go through with limited concessions. Microsoft, for its part, remains confident the transaction will be completed come mid-2023.

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Source: U.S. SEC