Sports betting giant DraftKings has been ordered to pay a $200,000 penalty after the U.S. Securities and Exchange Commission (SEC) found it in violation of disclosure rules. The fine comes as a result of DraftKings selectively disseminating material non-public information on social media platforms rather than sharing it with all investors, the SEC announced on Thursday.
Details of the Violation
According to the SEC, DraftKings’ public relations firm made posts on X (formerly Twitter) and LinkedIn in July of the previous year, touting the company’s “strong growth” despite the second-quarter financial results not yet being publicly released.
The posts were subsequently removed at the company’s request; however, the necessary disclosures were not made available to all investors until a week later, the SEC noted in its statement.
“It is essential that, when companies disseminate material, non-public information, they do so fairly to all investors,” emphasized John Dugan, associate enforcement director in the SEC’s Boston office. The SEC also stipulated that if companies use social media to share key information, they must notify investors in advance about which accounts will be used.
Regulatory Reminder and Company Reaction
The DraftKings incident serves as a reminder to companies about the importance of fair disclosure practices to ensure all investors have equal access to critical information. Transparency in communication remains a priority for the SEC, especially in today’s digital age where information can spread rapidly.
Representatives for DraftKings did not immediately respond to requests for comment regarding the SEC’s penalty.
Stay tuned as we follow any further developments or responses from DraftKings regarding this compliance issue.
