Under Armour has agreed to a $434 million settlement in a class action lawsuit regarding misleading financial disclosures.
- The lawsuit, filed in 2017, accused Under Armour of misrepresenting its financial status to shareholders.
- CEO Kevin Plank and the company were alleged to have exaggerated revenue growth claims to meet market expectations.
- Under Armour plans to use cash reserves and a $1.1 billion credit facility to fund the settlement.
- Approval of the settlement by the court is pending, which would prevent the scheduled trial in July.
Under Armour, a renowned brand in the sports apparel industry, has reached a settlement agreement valued at $434 million to conclude a class action lawsuit accusing the company and its chief executive officer, Kevin Plank, of financial misrepresentation. The lawsuit, initiated in 2017, alleged that Under Armour provided misleading information to shareholders concerning its revenue growth, which was purported to meet Wall Street forecasts. This development represents a pivotal moment for Under Armour as it seeks to resolve the litigation without proceeding to trial.
The terms of the settlement stipulate that Under Armour will utilise both its existing cash reserves and a substantial portion of its $1.1 billion credit facility to satisfy the financial obligations of the settlement. This settlement remains contingent upon approval by the court, a decision that could ultimately avert the scheduled trial set for the 15th of July at the Baltimore federal court. The resolution of this legal matter is intended to mitigate the distraction associated with ongoing litigation, thereby allowing the company to focus on its strategic business priorities.
Mehri Shadman, the chief legal officer and corporate secretary at Under Armour, asserted the company’s stance on the matter, stating, “We firmly believe that our sales practices, accounting practices and disclosures were appropriate, and deny any wrongdoing in this case.” Despite these claims, Under Armour’s willingness to settle underscores a pragmatic approach to ensuring stability and certainty for its business operations.
In a related development, Under Armour had previously resolved charges brought by the Securities and Exchange Commission by paying $9 million in 2021. These charges also pertained to alleged revenue inflation aimed at misleading investors. The current settlement, if sanctioned by the judiciary, will conclusively address all pending claims against Under Armour in this context, offering a comprehensive resolution to the matters at hand.
The settlement, if approved, will enable Under Armour to move forward from this long-standing legal issue and focus on its strategic objectives.
