Under Armour fined $9 million

  •   04/05/2021 - 09h08
  •   HARMANT Adeline

The beginning of the week starts in the red for the American sports equipment manufacturer which announced, this Monday May 03, 2021, that it had just paid 9 million dollars with an aim of regulating a disagreement with the gendarme of the American Stock Exchange is the Securities and Exchange Commission or SEC. The latter has indeed accused him of accounting fraud. Let's discover the details of this case.

Under Armour fined $9 million

Under Armour pays without pleading guilty:

One might think that the fact that the group agreed to pay this amount is in itself an admission of guilt but it is not. Indeed, the company which is notably the official sponsor of the American football superstar Tom Brady, the boxer Anthony Joshua or the basketball player Stephen Curry simply puts an end to the proceedings but does not acknowledge its guilt in this case.

Indeed, we also learned yesterday that the SEC and its teams in charge of this case do not intend to recommend that coercive measures be taken against the executive chairman of the board of directors, the chief financial officer or any other member of the management in connection with this investigation. This is at least what the group says in the statement issued yesterday at the end of the session.

For its part, the SEC estimated that the equipment manufacturer Under Armour sought to mislead investors by having resorted between the third quarter of 2015 and the fourth quarter of 2016, to certain fraudulent practices that allowed it to inflate its sales in order to make it consistent with analysts' forecasts.

For example, the group allegedly included in its quarterly accounts orders deliverable for later deadlines while attributing its revenue growth to other factors.

 

How is this information misleading?

The SEC found the company's disclosures to be misleading for a reason.

In a statement also issued yesterday on the matter, SEC Regional Office Director Kurt Gottschall said that when publicly traded companies describe how they achieve their financial results, they should not misrepresent critical information to investors.

He also said that Under Armour created a misleading picture of the drivers of its financial results and deliberately hid some of the uncertainties that were known about its business.

One would have expected a negative reaction from investors following this incriminating release for the company, but it was not to be. Indeed, on the US Wall Street market, Under Armour Group 's stock ended the session in the green with a 1.2% increase during the electronic exchanges that followed the close.