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SEC brings Regulation FD enforcement action for selective disclosure via social media
SEC Update
17 October 2024
On September 26, the SEC announced that it had charged public company DraftKings Inc. with violating Regulation FD, or “Fair Disclosure,” under the Exchange Act.
The SEC alleged that the company selectively disclosed material nonpublic earnings information to investors via social media outlets and, upon learning of this non-intentional disclosure, failed to make prompt disclosure of the information to the public as required by Regulation FD.
In settling the action, DraftKings agreed to the entry of a cease and desist order and the payment of a $200,000 civil money penalty. The SEC did not charge any company officers.
This latest SEC action to enforce Regulation FD does not establish any new enforcement positions, but points up the compliance risk a company could incur in using social media to communicate sensitive corporate information outside the company.
On September 26, the SEC announced that it had charged public company DraftKings Inc. with violating Regulation FD, or “Fair Disclosure,” under the Exchange Act.
The SEC alleged that the company selectively disclosed material nonpublic earnings information to investors via social media outlets and, upon learning of this non-intentional disclosure, failed to make prompt disclosure of the information to the public as required by Regulation FD.
In settling the action, DraftKings agreed to the entry of a cease and desist order and the payment of a $200,000 civil money penalty. The SEC did not charge any company officers.
This latest SEC action to enforce Regulation FD does not establish any new enforcement positions, but points up the compliance risk a company could incur in using social media to communicate sensitive corporate information outside the company.
The SEC’s litigation release for this action can be viewed here.
Authored by Alan Dye (co-editor), Richard Parrino (co-editor), Rupa Briggs, Kevin Greenslade, and Ann Kim.
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