SEC Charges DraftKings for Selective Disclosure of Information

On July 27, 2023, the U.S. Securities and Exchange Commission (SEC) announced charges against DraftKings for violating fair disclosure regulations. The charges stemmed from the company's public relations firm posting information about strong growth in states where DraftKings operated on the CEO's personal social media accounts. This information was not disclosed to all investors, raising concerns about selective disclosure practices. The posts were made at 5:52 p.m. and were subsequently removed at DraftKings' request. However, the company did not inform the public about this material information until a week later, coinciding with the announcement of its second-quarter financial earnings. The SEC highlighted the significance of timely and equitable information dissemination for investors, stating that such growth information is crucial for making informed investment decisions. As a result of these violations, DraftKings agreed to pay a civil penalty of $200,000 to settle the SEC's charges. The company did not admit or deny the findings but committed to avoiding future violations of the relevant provisions. This case underscores the importance of transparency and fairness in corporate communications, particularly in the context of publicly traded companies. The incident serves as a reminder for companies to adhere strictly to regulations regarding the disclosure of material information to ensure all investors have equal access to important data.