03 Aug 2021 9:09 PM +00:00

New Activision Blizzard Lawsuit Claims the Company Misled Investors

Activision Blizzard faces a second lawsuit, and this time it's a class action suit on behalf of the company's investors.

The suit (thanks, Kotaku) alleges Activision Blizzard knowingly misled investors by covering up details of the harassment and discrimination claims in years leading up to the first lawsuit.

The U.S. Sarbanes-Oxley (SOX) Act requires companies to disclose any information that could negatively affect the business. The Rosen Law Firm in Los Angeles is handling the suit, a group with a string of successes in suing companies for violating Securities Exchange and Commission regulations.

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However, Activision Blizzard CEO Bobby Kotick told investors there were no know problems the company faced in the business' 2016 SOX certification.

Read more: State of California sues Activision Blizzard for harassments and discrimination

New Activision Blizzard Lawsuit Claims the Company Misled Investors

We are party to routine claims, suits, investigations, audits, and other proceedings arising from the ordinary course of business, including with respect to intellectual property rights, contractual claims, labor and employment matters, regulatory matters, tax matters, unclaimed property matters, compliance matters, and collection matters. In the opinion of management, after consultation with legal counsel, such routine claims and lawsuits are not significant and we do not expect them to have a material adverse effect on our business, financial condition, results of operations, or liquidity.

In other words, the claims now coming to light were "routine," and Kotick believed they were too insignificant to pose a threat to Activision Blizzard's stock.

Investors claim Activision Blizzard knew about these allegations and issued the suit in light of the company's declining value and specifically target CEO Bobby Kotick, CFO Dennis Durkin, and CFO Spencer Neumann, claiming all three knowingly delivered false information about the company's prospects to investors.

Thus far, Kotick and other executive-level managers have remained largely unscathed by the current scandal, though former company president J. Allen Brack resigned his post on August 3. That the second suit names Kotick is no surprise, however, seeing as he signed a statement claiming the SOX Certification information was entirely true and accurate.

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[Source: Kotaku]