DraftKings fined over CEO’s LinkedIn post
The Securities and Exchange Commission slapped DraftKings with a penalty on Wednesday after regulators alleged the company’s public relations team shared too much information on the CEO’s personal X and LinkedIn accounts.
According to the SEC, the public relations team for the $20 billion fantasy sports and casino platform published a post on CEO Jason Robins’ personal X, formerly Twitter, account and on LinkedIn, stating, “There’s massive potential for growth in new markets—but we’re still seeing really strong growth in existing states. Our 2018-2019 state vintage grew over 80% on the revenue basis year-over-year in Q1. With those numbers, we expect robust growth even without new states opening.”
Neither of those platforms is an official source for DraftKings and information about company growth shouldn’t have been shared to the selective audiences on LinkedIn and X, alleged the SEC. After the posts went live, DraftKings’ communications team alerted the PR firm immediately and the posts were taken down within a half hour. Even so, DraftKings didn’t release the information to the general public or its investors for another seven days until its scheduled earnings release. The regulator said the selective disclosure violated rules requiring all investors be given information at the same time, or Regulation Fair Disclosure.
“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.”
Under DraftKings’ Reg FD policy, the company has a “quiet period” when employees are banned from talking about financial or operational results. The DraftKings social media posts appeared on July 27, 2023—before the quiet period ended on August 4. Regarding both the LinkedIn and X posts, DraftKings’ staff reviewed and approved the content, said the SEC. Doing so violated multiple internal social policies at DraftKings, which prohibits using blogs, social networks, chat boards, Facebook, and other platforms to disclose material information that hasn’t been made public, authorities said.
Without admitting or denying the SEC’s findings, DraftKings agreed to pay a $200,000 penalty for the penalized posts.
A DraftKings spokesperson told Fortune the company is “pleased to have this matter resolved.”
