On February 3, the U.S. Securities and Exchange Commission (SEC) announced that video game developer Activision Blizzard, Inc. (Activision) agreed to pay $35 million to settle accusations that it violated whistleblower protection rules and that its compliance program lacked essential elements — the ability to collect, track, and analyze workplace complaints — even though the commission failed to identify any harm to investors.[1] The SEC thus delivered on its 2022 end-of-year promise to protect whistleblowers by both “vigorously safeguarding whistleblowers’ anonymity” and pursuing enforcement actions against those who impede them.

According to the February 3 administrative order, the SEC found that Activision violated Section 21F and Rule 21F-17(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) through its use of a template separation agreement that required “a significant number” of former employees over the past several years to notify the company if a disclosure obligation arose with a government agency or regulatory body. Notably, the commission conceded that it was not aware of any instance in which a former Activision employee actually was discouraged or prevented from communicating with the SEC or in which Activision sought to enforce the notice requirement, but nevertheless found the language used “undermine[d] the purpose” of Dodd-Frank. The commission gave little credence to all-too-familiar language in a countervailing clause that...

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