The Securities and Exchange Commission is seeking information from scoreboard manufacturer Daktronics regarding its dealings with NBA player Kawhi Leonard, the company disclosed Wednesday.
Daktronics acting chief financial officer Howard Atkins confirmed the request during an earnings call. "We have received requests for information from the NBA. Additionally, the Securities and Exchange Commission is seeking information from us concerning the company and Mr. Leonard," Atkins said. "We take these requests seriously and are cooperating."
Atkins declined to provide further comment "out of respect for the respective processes." The SEC's involvement marks a federal agency's entry into a probe that previously involved only the NBA.
The NBA investigation centers on alleged salary cap circumvention involving Leonard and the Los Angeles Clippers. Daktronics designed the video board inside Intuit Dome, the Clippers' home venue. The company's business relationship with Leonard came under scrutiny in early August following reporting by journalist Pablo Torre.
This is the second instance of Leonard's business arrangements facing investigation. A previous inquiry focused on his endorsement deal with Aspiration, a now-defunct green financial services company.
Leonard signed a $28 million, four-year contract to market and endorse Aspiration. A contract clause allowed Leonard's company, KL2 Aspire LLC, to "decline to proceed with any action desired by the Company." Torre reported that a December 2022 payment of $1.75 million to Leonard came nine days after Clippers minority owner Dennis Wong's company invested in Aspiration. Another clause specified Leonard would receive payments only if he remained a Clippers player.
Clippers owner Steve Ballmer had made a significant investment in Aspiration prior to Leonard's contract.
The investigation has already delayed Leonard's trade to the Toronto Raptors, agreed to on June 30. Both franchises confirmed on July 9 that execution of the trade was delayed pending the investigation's conclusion. NBA training camps are scheduled to begin at month's end.
