DraftKings pays SEC settlement after charge for sensitive information disclosure on social media
Operator settles for $200,000 over CEO Jason Robins’ X and LinkedIn posts from July 2023, which revealed non-public information
DraftKings has agreed to pay a $200,000 settlement to the Securities and Exchange Commission (SEC) after being charged by the government body for revealing sensitive company information on social media.
The charge relates to a post on the private account of DraftKings CEO, Jason Robins, in July 2023.
Robins posted that the operator was showing “really strong growth” in states where it was already operating.
DraftKings’ PR firm posted a similar statement from Robins’ LinkedIn account on the same day.
At the time of the posts, DraftKings had not yet released its Q2 2023 results, in addition to not having publicly disclosed certain information contained in said posts.
Despite the fact DraftKings was required by the SEC’s Regulation Fair Disclosure (FD) directive to promptly share the information to all investors after it was selectively divulged to their social media followers, it did not disclose the information to the wider public until seven days later when it announced its Q2 2023 financial earnings.
Both posts were removed shortly after they were published, as per DraftKings’ request.
The Boston-based operator was charged with violating Section 13(a) of the Exchange Act, which “requires an issuer’s principal executive and financial officers to certify the information contained in the issuer’s periodic reports”, and Regulation FD.
Rather than accept or deny any wrongdoing, DraftKings agreed to pay the $200,000 penalty, cease and desist from future violations of the charged provisions, and undergo training for employees who have corporate communications responsibilities.
John Dugan, associate director for enforcement in the SEC’s Boston regional office, said: “Information about growth in sales as a public company can be extremely important to investors.
“It is essential that, when companies disseminate material, non-public information, they do so fairly to all investors.”
After EGR North America reached out for comment, a DraftKings spokesperson said: “DraftKings is pleased to have this matter resolved.”