New lawsuit against Activision Blizzard accuses Bobby Kotick of using Microsoft sale to escape liability for misconduct allegations

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While Activision Blizzard is currently undergoing an investigation from the FEC and a lawsuit from the State of California, it will now have to contend with a lawsuit from the City of New York as well. The lawsuit was filed by the New York City Employees’ Retirement System, a group that owns stock in Activision Blizzard, and alleges that CEO Bobby Kotick undervalued the company by selling to Microsoft for only $95 per share, which, while about $30 more than what Activision was trading for at the time of sale, is "a paltry 1.16%" above its value in the summer of 2021, before the scandals broke. The suit, as shared with Axios, claims that Kotick and the board of directors sold so quickly and for so little to avoid personal liability for the misconduct lawsuits. This fact, the suit claims, also makes Kotick unfit to manage the sale, since he "stands to personally receive substantial material benefits whose value is not directly aligned with the merger price."

The action, as described by attorney Richard Hoeg, is simply a "books and records request," meaning the plaintiff is requesting access to a list of documents from Activision Blizzard, including information on the five other potential buyers it has mentioned in the past, board memos and information regarding the Microsoft deal.

The suit also mentions the purchase of $108 million worth of Activision Blizzard stock by three associates of Kotick days before the merger was announced. The trio are estimated to have made $60 million in profit, and the sale is currently being investigated as a possible case of insider trading by both the U.S. Justice Department and the Securities and Exchange Commission, according to the Wall Street Journal. One of the three investors, Fox co-founder Barry Diller, has said the timing of the investment was just "one of those coincidences" and insists that the three of them "acted on no information of any kind from anyone."

Despite these concerns, 98% of Activision Blizzard shareholders voted to approve the merger with Microsoft in a vote on April 28. However, the deal is far from done. An unnamed source told Bloomberg in February that the Federal Trade Commission will be handling the antitrust review for the merger. FTC chair Lina Khan has been vocally critical of big tech company mergers in the past, to the point that Amazon has requested she be recused of investigations into the company.

There's plenty of action to back up her words, too. She, along with Assistant Attorney General for Antitrust Jonathan Kanter of the Department of Justice, is also in the process of rewriting the merger guidelines "to better detect and prevent illegal, anticompetitive deals in today's modern markets." The FTC recently sued to block the acquisition of Arm by Nvidia, which was largely responsible for ending that deal, and are also reportedly currently in the process of investigating Sony's acquisition of Bungie.

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Viri

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Ummm, yeah, no shit? I'd do the same thing if I was in his shoes. lol


Sell my company, get a "golden parachute", fuck off to another country, and retire into obscurity.
 
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Pachee

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So, one year later, did any evidence of "toxic workplace culture" and "inequality" ever show up? It's not that hard to leave a phone camera/mic on.
And MS seems to have got a bargain, wonder if there is more to this story than a guy trying to save face.
 
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FAST6191

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I can appreciate going for the best numbers you can but a minor spike during what would be said to be a bit of a bubble (now deflating rapidly) compared to year's average is a bit rich if wanting any sympathy
Screenshot_2022-05-08_09-17-50.png


As far as escaping liability then I mostly only know UK laws here but would it really have allowed him to dodge things, especially if things reached a level of actual misconduct?
 

osaka35

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So, one year later, did any evidence of "toxic workplace culture" and "inequality" ever show up? It's not that hard to leave a phone camera/mic on.
And MS seems to have got a bargain, wonder if there is more to this story than a guy trying to save face.
most likely, but it's not enough to have a good case with a few pieces of evidence. it's got to be nearly perfect, with evidence of time and evidence of it being systemic, if you're going to overcome a huge team of corporate lawyers.
 

Viri

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"toxic workplace culture"
People assume the worst. But at my old job, I seen people get fired for telling a joke to their friend during their break, and someone on the other side of the room in the office overhearing it, and then getting the guy fired. My old job considered that "toxic workplace culture". lol
 

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And MS seems to have got a bargain, wonder if there is more to this story than a guy trying to save face.
Oh wow did they not.

For sure, they totally jumped on activision thinking it was a golden opportunity, but it wasn't because they could acquire them for cheap. Normally there is no way in hell activision would have considered a buy out, but considering the mess they're in, there was a window of opportunity.

I don't know the deep details of the financials with their mobile gaming devision, but if you look at revenue and profit.... Yikes.

Unless microsoft ceo nadella manages to make windows 365 an endless gold mine, or have even modest enterprise uptake he's going to be tossed on his ass over this deal.

TLDR; They paid WAY too much, but foolishly jumped at the chance to buy while activision would be open to it. As for kotick, he gets a huge pay day and gets to walk away from the dumpster fire he's been pouring gas on for years.

I really hope, for microsofts sake, that this deal falls through
 
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Hang on a second... How does that 'escape from liability' work? If i sexually molest someone at my job, i can't just say'lol i have already quit' by the time legal action has taken its course. Those clowns are still just as liable as before. It's just that the threat of being fired isn't a punishment anymore for obvious reasons.

But i do say this case doesn't do itself justice by just showing allegations.
"oh, no... It just sells for a percent more than what the market thinks it's worth before the scandals broke out" is... Kind of a weak argument, considering MS paid quite a bit more than its current worth (sorry, but it's not just the scandals that plague the company) . I'm not a trader, but if there's something fishy going on i honestly don't see it.
 

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There is a saying: If the camel fell, its knives multiplied.

they don't really care about safe workplace, they only care about milking money out of the these stories.
 

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Bobby owned 6.5 million shares and options and he's 59 years old, he would have sold it anyway. Big game and movie studies were being bought up so the timing was right, it's just fortunate for him that it happened during all the scandals. But we all would have sold anything we owned if offered that much money by that age. It's not like he was a day one founder with emotional attachment. And it just so happens that Microsoft buying them is probably the best and fastest solution to resetting the toxic culture, so it's a good thing he sold it all imo, in terms of a solution to that.
 

FAST6191

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Normally there is no way in hell activision would have considered a buy out, but considering the mess they're in, there was a window of opportunity.
You say that but such things have been floated for some time now
https://www.forbes.com/sites/insert...ision-blizzard-is-not-strong/?sh=69d5302e3039
https://www.cnbc.com/2019/02/12/act...percent-in-4-months-strategist-says-buy-.html

https://www.gamerevolution.com/news/570827-disney-activision-buyout-works-recent-interview
https://edition.cnn.com/2019/08/09/investing/activision-blizzard-q2-2019-earnings/index.html

They had a bit of a rally at the end of the year and things since make those charts from a few posts back harder to discern fine detail. This would have also been about the timeframe that costs of developing for "next gen" would have become apparent, and while I generally consider that a false notion (give or take inflation, and even then maybe not*, you are only choosing to spend more money) it does seem to be one that is prevalent within game dev circles.

*you can get some kid that squeaked through high level programming school to make a game today if you want and the https://www.cs.utah.edu/~elb/folklore/afs-paper/node4.html style peeps from the assembly era would not have been able to come close.

I have certainly seen riper candidates for a takeover (looking through a bunch of https://investor.activision.com/annual-reports they were not necessarily leveraged up the eyeballs or anything like so many other consumer staples we have seen go pop these last few years) but looking at all those and their general position/market share/likely futures of their heavy hitters then would have been fools not to entertain discussions of something here.

Hang on a second... How does that 'escape from liability' work? If i sexually molest someone at my job, i can't just say'lol i have already quit' by the time legal action has taken its course. Those clowns are still just as liable as before. It's just that the threat of being fired isn't a punishment anymore for obvious reasons.

But i do say this case doesn't do itself justice by just showing allegations.
"oh, no... It just sells for a percent more than what the market thinks it's worth before the scandals broke out" is... Kind of a weak argument, considering MS paid quite a bit more than its current worth (sorry, but it's not just the scandals that plague the company) . I'm not a trader, but if there's something fishy going on i honestly don't see it.
I have been doing some reading since the earlier post. In your example such things would be more of a criminal concern and individual civil liability on top of that. If this is a civil financial concern (he is not alleged to have done anything* in the harassment aspects, and most limited companies have say a truly token sum for liability for things and maybe disqualification from holding a directorship in some circumstances, which if he is past what needed for retirement/age almost there and with more money than he could reasonably spend is no big deal) then it being wound up in a subdivision of Microsoft could lead things to be harder to collect on**. There are also some perks to having the case already in action as opposed to bringing it up later (Microsoft potentially having to set aside of a pot of money for this rather than saying "activision is just a trademark worth $1000, you can have it if you want").

*any wrongdoing then presumably having been actionable levels of ignorance of any claims (don't know what it would take to reach that) or some level of unlawful, or maybe unethical, suppression of them as it pertains to his duty to the shareholders or corporate governance. Though apparently this lawsuit does want to go there.

**when companies get taken over they don't always exist independently within the framework, and I am sure there are some very highly paid accountants and lawyers figuring out what to do here as far as future liabilities and staff retention -- hard to sue a company that is now little more than a name on a book somewhere and just so happens to license its own games and pay fees just so happening to equal their revenues. See also Hollywood accounting.

It is all quite odd and I am not sure how to explain it properly/fully but if we assume Activision/Mr Kotick did the deed as alleged (maybe there were some other investors looking to pay $100 per share but timeline was longer such that the other lawsuits could have hit the directors in the wallet or social standing*** more personally, this presumably being the need to unearth documents detailing other offers) then there are some legs/merit to the case. I am not sure what the resulting financial payout could be if it went all the way, or what the "go away now" number might be, or indeed if this is a potential spike to Microsoft's bid from somewhere and them needing to cloak it in a financial means (courts don't much care for making a point). What will be interesting to see is if this is quietly dropped if it becomes apparent all the other bids were actually lesser ones.

*** https://kotaku.com/please-quit-photoshopping-horns-onto-bobby-kotick-its-5968843
https://www.nytimes.com/2012/12/16/...rawing-praise-and-wrath.html?pagewanted=1&hpw

It's not like he was a day one founder with emotional attachment.
He was still there for 30 years and that puts it into life's work territory, something I have seen plenty get an emotional attachment to.
 
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