Betting Company Fined for Selective Disclosure Violations

A publicly traded online sports betting and gaming company settled SEC charges for selectively disclosing material, non-public information about its second-quarter earnings in advance of the company's official earnings release.

In its Order, the SEC found that the company violated Regulation FD ("Selective Disclosure") by posting material, non-public information on the personal social media accounts of the company's CEO, which was operated by the company's public relations firm. The SEC said the posts disclosed details regarding strong growth in existing states where the company operates—information that had not been shared with the public at large. The SEC found that this selective disclosure gave certain shareholders, who followed the CEO's accounts, an informational advantage over others.

The SEC concluded that the disclosures violated company compliance policies, including on the use of social media, which prohibit employees from sharing financial or performance-related information via personal social media channels. The SEC also found that the firm failed to enforce its internal quiet period policy, which restricts financial disclosures ahead of earnings reports. Further, the SEC said the company failed to promptly issue a public disclosure of the material information after the violation was discovered.

As a result, the SEC found that the company violated Regulation FD and SEA Section 13(a) ("Periodical and other reports").

To settle the charges, the company agreed to (i) cease and desist from future violations, (ii) a $200,000 civil penalty and (iii) additional employee training on compliance with Regulation FD.