In breaking news, Under Armour has agreed to pay $434 million to settle a 2017 class action lawsuit accusing the sports apparel maker of defrauding shareholders about its revenue growth in order to meet Wall Street forecasts. The proposed settlement, subject to court approval, averts a scheduled July 15 trial in Baltimore federal court. The lawsuit accused the apparel maker and CEO Kevin Plank of intentionally misleading shareholders about the company’s financial health.
This settlement comes after Under Armour agreed in 2021 to pay $9 million to settle Securities and Exchange Commission (SEC) charges related to misleading investors about its revenue growth. The SEC found that Under Armour failed to disclose a sales tactic that accelerated $408 million in existing orders in the second half of 2015.
Mark Solomon, lead counsel for the shareholders, called the proposed settlement an “important win” that highlighted the key role of pension funds in holding companies accountable. Under Armour plans to pay the settlement amount through cash on hand and drawing on its $1.1 billion revolving credit facility. The company also agreed to continue separating the roles of chair and chief executive officer for at least three years.
Under Armour maintains its denial of the accusations and said the agreement is not an admission of fault or wrongdoing. The company expects to accrue a total of $434 million in legal proceeding contingencies related to the lawsuit during the first quarter of fiscal year 2025, up from $100 million at the end of fiscal 2024.
