Sports betting company DraftKings agreed to settle charges that it violated Regulation FD disclosure rules, the Securities and Exchange Commission announced September 26.

The regulation prohibits the selective disclosure of material information. It permits the disclosure of material information on social media, but the company must first identify the accounts that people can expect that information to come from.

Said the SEC, it was this rule that DraftKings ran afoul of when it posted new information about the performance of the company on its CEO's personal X and LinkedIn accounts, without having previously identified those accounts as sources of information of this kind.

"Information about growth in sales as a public company can be very material to investors," said John Dugan, an associate director of enforcement for the SEC, in announcing the settlement. "It is vital that, when companies disseminate material, nonpublic information, they do so equitably to all investors."

The alleged violation dates back to last year, when the company's PR firm in July posted a statement about company performance under the name of company CEO Jason Robins.

The statement was posted on Robins' X and LinkedIn accounts and said the company continued to see "really strong growth" in states where it was already operating, the SEC said.

At the time of the posts, according to the agency, DraftKings had not yet publicly disclosed its second quarter 2023 financial results, nor had it publicly disclosed other information shared in the posts.

By releasing what amounted to new information in the way it did, the SEC said, the company was making material information available only to people who followed or otherwise viewed the CEO's posts.

The company requested that the posts be deleted a week after they were posted and the PR firm did just that.

It was a full week later than that that the company publicly released the performance data when it issued its quarterly earnings for the second quarter of 2023.

The SEC says that in handling the release of that information, this worked out as "selectively disclosing material, nonpublic information to investors who followed or otherwise viewed the company CEO's social media accounts without disclosing that same information to all investors.".
In announcing the settlement, the SEC referred to a report it released in 2013 in which it spells out its policy on the use of social media under its Regulation FD disclosure rules. The release announcing the report sums up the policy: "SEC says social media OK for company announcements if investors are alerted."