Activision Blizzard shares fell 7% on Tuesday after a report in The Wall Street Journal claimed CEO Bobby Kotick knew about sexual harassment allegations for years and failed to inform the board about some of the issues, including the alleged rapes.
Internal Activision documents show that Kotick "was aware of allegations of employee misconduct in many parts of the company. He failed to inform the board of directors of all that he knew ... even after regulators began investigating the incidents in 2018," the report said.
Securities and Exchange Commission subpoenaed Kotick over how Activision handled reports of wrongdoing and disclosed them to the public. This could pose a problem for the company if it turns out that Kotick was withholding certain information from investors that should have been disclosed.
The Wall Street Journal report comes just months after California sued the video game developer for discriminating in the workplace and fostering a "outlaw" culture that led to years of sexual harassment of female employees.
Activision reached an $18 million settlement with California in late September, although concerns over possible ethics violations associated with the case mean it is still ongoing.
Activision employees are unhappy with management and have expressed frustration with the company's departures in recent months. On Tuesday, more than 200 Activision employees staged another virtual and physical strike in response to a new report by The Wall Street Journal.
Some Activision employees want Kotick to quit and are also demanding an independent audit of the company.
This seems unlikely at the moment, given that Activision's board responded to The Wall Street Journal report with a statement in support of Kotick.
"The board remains confident that Bobby Kotick has adequately addressed the workplace concerns brought to his attention," the statement said.
While the board remains confident in Kotick, investors have been spooked by reports of wrongdoing, with Activision Blizzard losing about $20 billion in market value since California sued it in July.
According to https://exness1.org/bonuses/, Activision Blizzard's shares have fallen 28% since the beginning of the year, outpacing declines among video game peers Take-Two Interactive and Electronic Arts, which fell 14% and 3% respectively over the same period.