BOSTON — The Securities and Exchange Commission on Thursday slapped Boston-based DraftKings with a $200,000 fine over posts that were shared on the company CEO’s social media pages.
The SEC said that the fantasy sports and casino platform’s public relations team published posts on the personal X and LinkedIn accounts of CEO Jason Robins on July 27, 2023, that stated the company continued to see “really strong growth” in states where it was already operating.
At the time of the posts, DraftKings had not yet disclosed its second quarter 2023 financial results, nor had it otherwise publicly disclosed certain information contained in the posts, according to the SEC.
The SEC found DraftKings in violation of Regulation Fair Disclosure, charging the company with “selectively disclosing material, nonpublic information to investors who followed or otherwise viewed the company CEO’s social media accounts without disclosing that same information to all investors.”
Regulation Fair Disclosure required DraftKings to promptly disclose the information to all investors after it was selectively disclosed to some, but the SEC said DraftKings failed to disclose that information to the public until seven days later when it announced its financial earnings for the second quarter of 2023.
“Information about growth in sales as a public company can be extremely important to investors,” John Dugan, Associate Director for Enforcement in the SEC’s Boston Regional Office, said in a statement. “It is essential that, when companies disseminate material, nonpublic information, they do so fairly to all investors.”
Without admitting to or denying the SEC’s findings, DraftKings agreed to cease and desist from future violations, pay the civil penalty, and comply with required Regulation Fair Disclosure training for employees who have corporate communications responsibilities.
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