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Under Armor pays $ 9 million for SEC resolution



WASHINGTON – Under Armor Inc. agreed to pay $ 9 million to settle regulatory claims that it failed to disclose attracting orders from future quarters, a practice that allows it to meet Wall Street revenue estimates.

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The Baltimore-based clothing company has authorized the Securities and Exchange Commission’s investigation without acknowledging or denying wrongdoing, the SEC said Monday. The Wall Street Journal reported in 2019 that federal officials are checking to see if the sportswear maker has shifted sales from quarter to quarter to look healthier.

UNDER ARMOR SELLS A FITNESS APPLICATION PURCHASED IN 2015

The SEC has no plans to take any enforcement action against Kevin Planck, co-founder and CEO of the company, or CFO David Bergman, the press release said. Under Armor previously revealed that the two men had been notified that they could be tried by the SEC.

Facade of the Under Armor Sportswear Store in San Francisco Premium Outlets in Livermore, California, June 9, 2019 (Photo: Smith Collection / Gado / Getty Images)

The practice of withdrawing orders for about $ 408 million occurred in six consecutive quarters beginning in the third quarter of 2015, the SEC said. Sales include orders that customers have requested to be shipped in future periods, the SEC said.

The regulator claims that the company has misled investors by not disclosing a significant part of its revenues and revenue growth is a result of practice. The lack of disclosure has created “significant uncertainty” over whether Under Armor will meet its revenue guidelines in the coming quarters, the SEC said in a statement.

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

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According to Armor’s need to withdraw sales orders to meet quarterly targets, the company has prompted 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 goods replied, “We just brought a bunch of goods in the beginning to help your quarter … Now you want more. More .. More..more..30% [price discount] Please.”

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

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


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