The Class Action seeks to recover damages on behalf of investors that were damaged as a result of allegedly false and misleading statements and omissions of material facts arising from an alleged scheme by Activision, the Company’s former Chief Executive Officer and member of the Board Robert Kotick (“Kotick”), and the Company’s former Chairman of the Board Brian Kelly (“Kelly”). Kotick and Kelly allegedly locked in huge profits on their stock holdings, options and other incentives by hastily negotiating Activision’s sale to Microsoft, to the detriment of the Company’s public shareholders.
Among other things, the Class Action alleges that widespread sexual harassment and discrimination allegations against Activision and its executives emerged starting in July 2021, resulting in numerous state and federal regulatory investigations and multiple employee walkouts. In response, Defendants Kotick and Kelly allegedly orchestrated a rushed corporate Merger—at a price that did not reflect the Board’s internal valuation of the Company, in order to guarantee hundreds of millions of dollars in profits from their existing equity in Activision—before allegations of the workplace harassment threatened their positions and the Company’s ongoing business relationship with Microsoft. As part of this scheme, Defendants allegedly made a series of material misstatements and omissions of material facts, beginning with the January 2022 announcement of the Merger through the close of the transaction, which misrepresented the motive, process and fairness of the Merger, and failed to disclose significant incentives to Microsoft in connection with the transaction.
