New York City has sued Activision Blizzard, accusing CEO Bobby Kotick of rushing to seal Microsoft's acquisition of his company to escape liability for widely reported misconduct at Activision Blizzard, Axios reported Wednesday.
The New York City Employees' Retirement System and pension funds for the city's teachers, police and firefighters filed the suit in Delaware on April 26. These groups own stock in Activision, and claim the action Kotick took hurt the company's value, thereby endangering their pension fund.
The suit, technically a "220 complaint," allows stockholders to pressure companies to reveal their records alongside any potential wrongdoing. Since autumn, New York City has pressed Activision for documents that would reveal the extent of Kotick's knowledge of sexual misconduct at the company. It also hopes to force Activision to reveal material related to the Microsoft deal, information on the five possible buyers Activision referred to in its official description of the sale talks, board memos, and more.
"Given Kotick's personal responsibility and liability for Activision's broken workplace, it should have been clear to the Board that he was unfit to negotiate a sale of the Company," reads the suit. "But it wasn't."
New York's suit also says the Microsoft deal, which would purchase Activision for $95/share should regulators approve it, undervalues the company. Shares were trading at close to that total before Activision began its apparently never-ending run of bad news in summer 2021 with the California Department of Fair Employment and Housing suit.
Activision Blizzard shareholders approved the Microsoft deal last week. The Federal Trade Commission still has to give the go-ahead, and several U.S. Senators have pushed the regulator to be particularly diligent in scrutinizing the deal.
The Wall Street Journal reported in November that Kotick knew of misconduct at Activision Blizzard.
Per Activision's latest quarterly filing, published Tuesday, the company faces the following suits and investigations:
- One harassment suit by the Equal Employment Opportunity Commission (settled)
- The aforementioned DFEH discrimination suit
- One purported class action suit
- Four shareholder lawsuits (consolidated to two)
- Eight lawsuits over the Microsoft merger, four of which have been voluntarily dismissed
- Two "220 complaints," including the one by New York City
- One SEC investigation
- Insider trading inquiries frmo the SEC and the Department of Justice