Activision-Blizzard is facing shareholder pressure after it emerged that the company may have withheld information from investors regarding the investigation carried out by the Californian Department of Fair Employment and Housing (DFEH). At present, at least three different law firms are investigating claims of securities violations in the company related to the ongoing investigation.
According to statements from Lowey Dannenberg, P.C, Rosen Law Firm, and The Schall Law Group, the Activision-Blizzard group may have withheld information related to the investigation from shareholders or investors, or "issued materially misleading business information to the investing public". This in turn could have led to investors overpaying for shares in the company, as the statement below from The Schall Group claims:
"The investigation focuses on whether the Company issued false and/or misleading statements and/or failed to disclose information pertinent to investors. Activision Blizzard is the target of a lawsuit filed by California’s Department of Fair Employment and Housing on July 20, 2021. The lawsuit claims that women working at the Company were subjected to “constant sexual harassment,” which executives were aware of. The lawsuit alleges that the Company violated the Equal Pay Act and the Fair Employment and Housing Act. Based on this news, shares of Activision Blizzard suffered considerable losses over the next several trading sessions."
These suits are not in support of victims but instead aimed at recovering potential financial losses for those investors who bought shares in the group without being made aware of the potential damage the investigation could do to their value. According to a report from Business Insider published on July 28, Activision-Blizzard lost nearly $8B in market value off the back of the investigation, and the fallout from the same.
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There were walkouts at the Blizzard office this week as staff look to improve working conditions, with employees and fans also calling initial responses from the publishing giants "tone deaf". There was also a movement online for users to boycott all Blizzard titles, albeit only for a single day, in order to make the company aware of how their customers feel about the revelations brought to light by the DFEH.
Activision’s response has been inconsistent, to say the least, with initial reactions from inside the company decrying the report as distorted and meritless. Fran Townsend, a former Bush-staffer, sent an internal email calling the allegations distorted, outdated, and factually incorrect, which was made public by Bloomberg reporter Jason Schreier. CEO Bobby Kotick finally spoke on the matter on July 28, where he thanked those who came forward for their courage and called the initial responses to the allegations "tone deaf".
This is not the first time the group has been investigated for such an issue, with a 2019 suit alleging that the sale of Bungie was withheld in a similar manner, a move that caused a 7% drop in share value. Since then the group has seen record profits based on the success of Call of Duty and the Warzone spinoff battle royale. Typically cases of this kind only payout to those who have lost significant amounts ($50K+).