DraftKings Faces $200,000 SEC Fine for CEO’s Social Media Post

CEO’s Personal Posts Lead to Regulatory Penalty

The SEC’s concern centered on Robins sharing company updates on his personal social media platforms, which are not considered official channels for corporate disclosures. According to the SEC, such information must be accessible to all investors simultaneously to comply with Fair Disclosure rules.

In the post, Robins highlighted the company’s strong performance, 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.” This message was shared a week before DraftKings’ scheduled earnings release, raising concerns about selective disclosure.

After the post went live, the SEC promptly notified DraftKings of the violation. The company’s public relations team removed the updates within half an hour of their publication. Despite the quick action, the premature release of financial information potentially gave some investors an unfair advantage.

Resolution Without Admission of Guilt

Regulation Fair Disclosure mandates that companies share material information with all investors at the same time. By disseminating financial updates on personal social media accounts, DraftKings breached this principle, according to the SEC. The regulator emphasized that sensitive information should not be shared to a limited audience but made available through official channels.

DraftKings has agreed to pay the $200,000 fine without admitting or denying the SEC’s claims. This settlement allows the company to move forward without a formal acknowledgment of wrongdoing.