Corporate Counsel Quotes Michael Asaro on SEC Activision Settlement

For its article “SEC's Activision Smackdown Over 'Risk Factors' Reverberating Through Legal Departments,” Corporate Counsel quoted Akin white collar defense & global investigations practice co-head Michael Asaro.

The article looks at a warning from the Securities and Exchange Commission (SEC): When legal departments disclose a “risk factor” in regulatory filings, they need to have internal controls monitoring it. This warning, Corporate Counsel reports, came in the form of the SEC’s $35 million settlement with Activision Blizzard in a case involving complaints of widespread worker harassment and the fact that Activision’s quarterly filings had noted hiring and retention risks.

Mike noted that this settlement marks the SEC’s most significant enforcement action featuring the “social” of environmental, social and governance (ESG) disclosures: “While the SEC prioritizing ESG is not particularly new, before this case, the agency had not focused on workplace misconduct in the same way as, for example, environmental matters.”

He added, “To adapt, companies will need to reexamine their disclosures and disclosure controls with hot-button social issues, such as workplace misconduct, front of mind.”

Corporate Counsel also cites and links to Akin client alert “The SEC Reminds Companies Not to Forget the ‘S’ in ESG: Activision Blizzard Reaches $35 Million Settlement over Disclosure Controls Related to Workplace Complaints and Violation of Whistleblower Protection Rule,” in which the firm noted that the settlement is “highly unusual” due to its large size and because it does not allege materially false or misleading representations and that it sense “a clear signal that the SEC is taking an aggressive approach to enforcing workplace-related disclosures.”