Under Armor pays $ 9 million for SEC probe resolution – fr

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Under Armor pays $ 9 million for SEC probe resolution – fr


WASHINGTON – Under Armor Inc. has agreed to pay $ 9 million to settle regulatory claims that it did not disclose that it was withdrawing forward orders from future quarters, a practice that allowed it to meet estimates of Wall Street income.

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UA UNDER ARMOUR INC 19,86 -0,03 -0,15%

The Baltimore-based clothing company has resolved the Securities and Exchange Commission investigation without admitting or denying the wrongdoing, the SEC said Monday. The Wall Street Journal reported in 2019 that federal officials were examining whether the sportswear maker shifted sales quarter-to-quarter to appear healthier.

UNDER ARMOR SELLS FITNESS APP PURCHASED IN 2015

The SEC has no plans to take any enforcement action against Kevin Plank, co-founder and executive chairman of the company, or CFO David Bergman, Under Armor said in a press release. Under Armor previously revealed that the two were told they could be prosecuted by the SEC.

Frontage of the Under Armor sportswear brand outlet store at the San Francisco Premium Outlets in Livermore, Calif., June 9, 2019 (Photo by Smith Collection / Gado / Getty Images)

The practice of advancing around $ 408 million in orders occurred over six consecutive quarters starting in the third quarter of 2015, the SEC said. The sales involved orders that customers had requested to be shipped in future periods, the SEC said.

The regulator alleged that the company misled investors by not disclosing a significant portion of its revenue and revenue growth resulted from the practice. The lack of disclosure has created “significant uncertainty” as to whether Under Armor will meet its revenue guidance in the coming quarters, the SEC said in a press release.

“Under Armor has created a misleading picture of the drivers of its financial results and covered up known uncertainties about its business,” SEC Denver Regional Director Kurt Gottschall said in a statement.

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The need for Under Armor to advance sales orders to meet quarterly targets prompted the company to offer incentives such as discounts or extended payment terms to wholesale customers, the SEC said in a settlement order. In one case in September 2016, a company that was asked to commit to buying more products responded, “We just brought in a bunch of your products early to help your neighborhood… Now you want more. … More .. More..more..30% [price discount] please. “

Under Armor gave the company a 25% reduction and an additional month to pay, the SEC said in the order.

Under Armor said in its press release that it had not received any requests for information from the Department of Justice since the second quarter of 2020. The Journal reported in 2019 that the DOJ and the SEC were investigating Under Armor.

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