Under Armour Paying $9 Million to Fix SEC Accounting Probe
< img src=" https://images.wsj.net/im-333500/social" class=" ff-og-image-inserted"/ > WASHINGTON– Under Armour Inc.. UA -0.15% consented to pay $9 million to settle regulative claims that it failed to divulge that it was pulling forward orders from future quarters, a practice that enabled it to satisfy Wall Street’s earnings estimates.
The Baltimore-based clothing business fixed the Securities and Exchange Commission investigation without confessing or rejecting wrongdoing, the SEC stated Monday. The Wall Street Journal reported in 2019 that federal officials were examining whether the sportswear maker shifted sales from quarter to quarter to appear much healthier.
The SEC does not plan to take any enforcement action against Kevin Slab, the company’s co-founder and executive chairman, or Chief Financial Officer David Bergman, Under Armour said in a press release. Under Armour previously divulged that the 2 men had been informed they might be sued by the SEC.
The practice of pulling forward about $408 million in orders occurred over six successive quarters beginning in the third quarter of 2015, the SEC said. The sales included orders that customers had actually requested be shipped in future periods, the SEC stated.
The regulator alleged the business misguided investors by not divulging a considerable part of its earnings and income growth resulted from the practice. The lack of disclosure developed “substantial uncertainty” about whether Under Armour would satisfy its profits assistance in future quarters, the SEC stated in a news release.
” Under Armour produced a deceptive photo of the motorists of its financial results and hid known uncertainties concerning its company,” SEC Denver Regional Director Kurt Gottschall stated in a declaration.
Under Armour’s need to pull forward sales orders to meet quarterly targets prompted the company to offer incentives such as discount rates or extended payment terms to wholesale clients, the SEC stated in a settlement order. In one case, in September 2016, a company that was asked to dedicate to purchasing more products responded: “We just brought a bunch of your products in early to assist your quarter … Now you want more … More. More. more..30% [cost discount rate] please.”
Under Armour provided the business a 25% discount and an additional month to pay, the SEC stated in the order.
Under Armour stated in its news release that it hasn’t received any requests for info from the Justice Department because the 2nd quarter of 2020. The Journal reported in 2019 that the DOJ and SEC were investigating Under Armour. Compose to
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