The Securities and Exchange Commission has launched a formal probe into Activision’s stock-option grant practices, the company reported in a 10-Q amendment on Wednesday. The investigation permits the SEC to subpoena witnesses and require the production of documents.
The SEC began an informal inquiry last July, the company noted. In March, Activision disclosed that a special subcommittee found inaccurately reported measurement dates for certain stock options granted from 1994 through 2006.
Activision also said that four unnamed individuals—former heads of the finance, legal, and human resources departments and a former outside legal adviser—”bore significant responsibility” in varying degrees for the inaccuracies. The company stated, however, that the subcommittee found no evidence of intentional wrongdoing on their part or by chairman and chief executive officer Robert A. Kotick, co-chairman Brian G. Kelly, director and senior adviser Ronald Doornink, or senior vice president, general counsel, and secretary George Rose.
The subcommittee recommended that 10 current and former officers and directors should relinquish the economic benefits resulting from the misdating and mispricing of stock options.
The video-game maker stated that it’s cooperating with the probe. Representatives of a special subcommittee of independent board members as well as lawyers for the company have met with members of the SEC’s staff in person and by telephone. While a representative of the Department of Justice has attended some of the meetings and asked for copies of documents the company has provided to the SEC, Activision says it hasn’t received any grand jury subpoenas or written requests from the DOJ.