The U.S. Securities and Exchange Commission reached a $35 million enforcement settlement with a publicly traded company that failed to disclose personnel practices as required by revised SEC regulations, the agency announced February 3.
Video game company Activision Blizzard allegedly violated SEC’s Regulation S-K, which requires disclosure of specified material information describing the business and its property, legal proceedings, and risk factors. A 2020 amendment to Regulation S-K requires disclosure of human capital resources material to a company’s business as a whole.
The SEC found that the company knew that its ability to attract and retain employees was a particular risk to its business but nonetheless lacked procedures to analyze employee complaints of workplace misconduct and therefore could not assess its possible obligation for public disclosure.
Activision Blizzard also violated Exchange Act Rule 21F-17(a), which prohibits impeding an individual from communicating directly with SEC staff about a possible securities law violation, the SEC concluded. The company’s separation agreements required former employees to notify the company if an administrative agency contacted them about a complaint.