Activision Blizzard pays SEC $35 million to settle probe
Bobby Kotick, CEO of Activision Blizzard, attends the Allen & Company Sun Valley Conference on July 8, 2022, in Sun Valley, Idaho.
Kevin Dietsch | Getty Images News | Getty Images
Video game developer Activision Blizzard agreed to pay a $35 million settlement over charges it failed to maintain “adequate” controls for assessing reports of workplace misconduct reporting procedures and that it violated federal whistleblower protection rules, the Securities and Exchange Commission said Friday.
The SEC claimed workplace misconduct complaints were neither collected nor analyzed employee complaints as expected by public disclosure regulations. “Moreover, taking action to impede former employees from communicating directly with the Commission staff about a possible securities law violation is not only bad corporate governance, it is illegal,” SEC director Jason Burt said.
The settlement is not an admission or denial of wrongdoing but concludes a probe that focused on Activision Blizzard’s standards from 2018 to 2021.
Activision Blizzard CEO Bobby Kotick was aware of reports of alleged sexual misconduct at the company, including alleged rape, the Journal reported in 2021.
“Mr. Kotick would not have been informed of every report of misconduct at every Activision Blizzard company, nor would he reasonably be expected to have been updated on all personnel issues,” an Activision Blizzard spokesperson said at the time.
The SEC filing claimed Activision Blizzard required “a significant number” of departing employees who signed separation agreements to tell Activision Blizzard if regulators tried to contact them, or even if those employees wished to make a complaint of their own. Activision Blizzard’s requirement that ex-employees notify the company violated federal whistleblower protections, the SEC claimed.
The SEC noted that it wasn’t aware that of “any specific instances” where an employee was prevented from making a complaint or speaking to regulators.
The SEC order did not explicitly mention Kotick or sexual harassment claims by some employees. Activision Blizzard had been under SEC investigation over the company’s handling of sexual and personal harassment since 2021, the Wall Street Journal previously reported.
“When the Company received complaints we responded to them appropriately and after the extensive and thorough reviews of workplace policies and procedures, workplace practices, compliance, and company data performed by an array of external company advisors including former EEOC Chair Gilbert Casellas, Skadden Arps, WilmerHale, Paul Hastings and CDF Labor Law LLP, the Board concluded there was never widespread or systemic harassment, retaliation or discrimination at the Company,” an Activision Blizzard spokesperson said. “The Board and advisors also concluded there was no evidence that the Company’s senior executives ignored complaints when they were reported.”
Activision took steps from 2020 to 2022 to enhance procedures for handling employee complaints, the SEC order noted.
“As the order recognizes, we have enhanced our disclosure processes with regard to workplace reporting and updated our separation contract language,” an Activision Blizzard spokesperson said on Friday.
The company settled an Equal Employment Opportunity Commission probe in Mar. 2022 for $18 million over related claims of retaliation in connection with sexual harassment claims.
In Dec. 2022, the Federal Trade Commission moved to block Microsoft’s acquisition of Activision, which was announced in January of that year, claiming that the deal would violate federal antitrust laws.
Correction: The SEC said it settled with Activision Blizzard over failure to maintain “adequate” controls for assessing reports of workplace misconduct, not harassment.
Technology
Figure AI sued by whistleblower who warned that startup’s robots could ‘fracture a human skull’
Startup Figure AI is developing general-purpose humanoid robots.
Figure AI
Figure AI, an Nvidia-backed developer of humanoid robots, was sued by the startup’s former head of product safety who alleged that he was wrongfully terminated after warning top executives that the company’s robots “were powerful enough to fracture a human skull.”
Robert Gruendel, a principal robotic safety engineer, is the plaintiff in the suit filed Friday in a federal court in the Northern District of California. Gruendel’s attorneys describe their client as a whistleblower who was fired in September, days after lodging his “most direct and documented safety complaints.”
The suit lands two months after Figure was valued at $39 billion in a funding round led by Parkway Venture Capital. That’s a 15-fold increase in valuation from early 2024, when the company raised a round from investors including Jeff Bezos, Nvidia, and Microsoft.
In the complaint, Gruendel’s lawyers say the plaintiff warned Figure CEO Brett Adcock and Kyle Edelberg, chief engineer, about the robot’s lethal capabilities, and said one “had already carved a ¼-inch gash into a steel refrigerator door during a malfunction.”
The complaint also says Gruendel warned company leaders not to “downgrade” a “safety road map” that he had been asked to present to two prospective investors who ended up funding the company.
Gruendel worried that a “product safety plan which contributed to their decision to invest” had been “gutted” the same month Figure closed the investment round, a move that “could be interpreted as fraudulent,” the suit says.
The plaintiff’s concerns were “treated as obstacles, not obligations,” and the company cited a “vague ‘change in business direction’ as the pretext” for his termination, according to the suit.
Gruendel is seeking economic, compensatory and punitive damages and demanding a jury trial.
Figure didn’t immediately respond to a request for comment. Nor did attorneys for Gruendel.
The humanoid robot market remains nascent today, with companies like Tesla and Boston Dynamics pursuing futuristic offerings, alongside Figure, while China’s Unitree Robotics is preparing for an IPO. Morgan Stanley said in a report in May that adoption is “likely to accelerate in the 2030s” and could top $5 trillion by 2050.
Read the filing here:
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