Activision Blizzard In Middle Of Insider Trading Scandal?

By Jason Collins | 3 weeks ago

Activision Blizzard

It’s time for another daily dose of the Activision Blizzard (ABK) scandal, which apparently rolls out from an unending reel of unethical business and human rights practices. As per the newest reports, the company has received a request for information from the Securities and Exchange Commission (SEC) and a grand jury subpoena from the Department of Justice (DOJ) related to the investigations about whether investors close to ABK’s CEO, Bobby Kotick, engaged in insider trading of ABK stock prior Microsoft’s acquisition of the company. This is just the latest in a series of legal scandals surrounding the company.

According to The Hollywood Reporter, Activision Blizzard said in a legal filing on Friday that it would cooperate with an investigation relating to trading by third parties, including parties known to ABK’s CEO, in insider trading before the deal with Microsoft was made public. Although the names of the third parties weren’t officially disclosed, the Wall Street Journal reported that the DOJ and SEC had opened investigations into substantial wagers Barry Diller, David Geffen, and Alexander von Furstenberg placed on ABK before the Microsoft deal was made public.

activision blizzard

Last year, the California Department of Fair Employment and Housing (DFEH) lawsuit unraveled a series of wrongdoing (an understatement) perpetrated by Activision Blizzard’s higher-ups. This resulted in a subsequent avalanche of additional cases, public protests, and controversies reflecting the worth of company stocks, which plummeted. However, after Microsoft announced its acquisition of ABK for nearly $70 billion, the company’s stock price went up by more than 25%.

CES and DOJ’s investigation is currently centered around Activision Blizzard’s CEO and the aforementioned investors, alleging that Kotick met with von Furstenberg, Diller’s stepson, the week before von Furstenberg, Diller, and Geffen, made substantial options trades that allowed them to make out with approx. $60 million in profits. The DOJ and CES are examining separately whether the wager violated insider trading laws.

SEC Rule 10b-5 prohibits corporate officers and directors, in this case, Bobby Kotick and other insider employees, from using confidential corporate information to reap profits or avoid losses by trading in the company’s stock. This SEC rule also prohibits said company officials from “tipping” confidential corporate information to third parties. Naughty, naughty Activision Blizzard corporate officers and directors.

If you think that foul play, you must’ve missed our previous report about Activision Blizzard allegedly wielding political influence to interfere with DFEH’s lawsuit that exposed numerous wrongdoings rampant in the company — primarily sexual harassment and gender discrimination. If those allegations turn out to be true, two key lawyers were unjustly removed from the DFEH’s case by political parties operating in ABK’s interest.

Whether or not that is the case remains to be seen. This isn’t the first time SEC has been investigating Activision Blizzard. The said investigation is just another one in the row of numerous legal processes surrounding ABK. The company still faces the previously mentioned DFEH lawsuit, on top of at least nine separate lawsuits filed by shareholders, some of which are actually looking to block Microsoft’s acquisition of the company.