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Under Armor pays $ 9 million. For SEC probe resolution



WASHINGTON – Under Armor Inc. agreed to pay $ 9 million to settle regulatory requirements that did not reveal that it drew orders from future quarters, a practice that made it possible to meet Wall Street’s revenue estimates.

Ticker Security Last Change Change %
UA UNDER ARMOR INC 1
9.88
-0.03 -0.15%

The Baltimore-based clothing company solved the Securities and Exchange Commission investigation without admitting or denying misdemeanors, the SEC said Monday. The Wall Street Journal reported in 2019 that federal officials were investigating whether the sportswear manufacturer switched sales from quarter to quarter to look healthier.

UNDER ARMOR SELLS THE FITNESS APP IT PURCHASED IN 2015

The SEC does not plan to take any enforcement action against Kevin Plank, the company’s co-founder and chief executive officer or Chief Financial Officer David Bergman, Under Armor said in a press release. Under Armor previously revealed that the two men had been told they could be sued by the SEC.

Facade of Outlet Store for Athletic Clothing Brand Under Armor at San Francisco Premium Outlets in Livermore, California, June 9, 2019. (Photo by Smith Collection / Gado / Getty Images)

Practice of pulling approx. $ 408 million in orders came over six consecutive quarters beginning in the third quarter of 2015, the SEC said. The sale involved orders that customers had requested were shipped in future periods, the SEC said.

The regulator claimed that the company misled investors by not disclosing a significant portion of its revenue, and the revenue growth was due to practice. The lack of disclosure created “significant uncertainty” about whether Under Armor would meet its revenue guidance in future quarters, the SEC said in a press release.

“Under Armor created a misleading picture of the driving forces behind its financial performance and hid known uncertainties surrounding its business,” SEC Denver Regional Director Kurt Gottschall said in a statement.

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Under Armor’s need to pull sales orders rather than meet quarterly targets, the company was offered 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 asked to commit to buying more goods responded: “We just brought in a bunch of your goods early to help your quarter … Now you want more … More .. More..more..30% [price discount] Please.”

Under Armor, the company gave 25% off and an extra month to pay, the SEC said in the order.

Under Armor said in its press release that they have not received any requests for information from the Ministry of Justice since the second quarter of 2020. The journal reported in 2019 that the DOJ and SEC were investigating Under Armor.


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