Under Armour settles SEC charges for $9 millionPosted On: May. 4, 2021 1:18 PM CST
Sports apparel manufacturer Under Armour Inc. has agreed to pay $9 million to settle U.S. Securities and Exchange Commission charges it misled investors, the agency said Monday.
The SEC said the Baltimore-based company misled investors as to the bases of its revenue growth and failed to disclose known uncertainties about its future revenue prospects.
The SEC said that by the second half of 2015, Under Amour’s internal revenue and revenue growth forecasts for the third and fourth quarters of that year began to indicate shortfalls from analysts’ revenue estimates.
The SEC said in its statement that, for example, the company was not meeting internal sales projections for North America, and warm winter weather was negatively impacting sales of its higher-priced cold-weather apparel.
The agency said that in response, for six consecutive quarters beginning in 2015’s third quarter, Under Armour accelerated or “pulled forward” a total of $408 million in existing orders that customers had requested be shipped in future quarters and misleadingly attributed it to revenue growth.
The SEC said the company failed to disclose that its increasing reliance on these pull forwards raised significant uncertainty as to whether it would meet its revenue guidance in future quarters.
The SEC charged Under Armour with violating federal securities law. The agency said the company agreed to pay the $9 million penalty without admitting or denying the findings in the SEC’s order, and that it agreed to cease and desist from further violations.
Under Armour said in a statement, “This settlement relates to the company’s disclosures and does not include any allegations from the SEC that sales during these periods did not comply with generally accepted accounting principles. … The settlement resolves all outstanding SEC claims. The SEC staff has confirmed that it does not intend to recommend that any enforcement action be taken against the company’s executive chairman, chief financial officer or any other member of management in connection with this investigation.”