SEC Charges DraftKings With Fair Disclosure Violation: What To Know

DraftKings Inc. (NASDAQ:DKNG) shares are trading slightly lower in Thursday's extended trading after the U.S. Securities and Exchange Commission (SEC) said it charged the company with selectively disclosing material, nonpublic information to investors who followed the company CEO's social media accounts without disclosing that same information to all investors.

The Details: The SEC order found that on July 27, 2023, at 5:52 p.m., DraftKings' public relations firm published a post on the personal X account of the DraftKings CEO stating that the company continued to see "really strong growth" in states where it was already operating. The PR firm also posted a similar statement on the CEO's LinkedIn account the same day.

Shortly after the public relations firm published the posts, it removed both posts at the request of DraftKings. However, the company failed to disclose the information to the public, after being prompted to do so by the SEC, 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," said John Dugan, associate director for Enforcement in the SEC's Boston Regional Office. "It is essential that, when companies disseminate material, nonpublic information, they do so fairly to all investors."

The SEC said that DraftKings agreed to pay a $200,000 civil penalty to settle the SEC's charges, without admitting or denying the order's findings and to desist from future violations of the charged provisions.

DKNG Price Action: According to Benzinga Pro, DraftKings shares are down 0.29% after-hours at $40.82 at the time of publication Thursday.

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Photo: Courtesy of DraftKings, Inc.

DKNGDraftKings Inc

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