Under Armour Will Pay More than $400 Million to Resolve Shareholder Lawsuit Over Sales Disclosures

On June 22nd, 2024, CNN reported that Under Armour—the Baltimore, Maryland based sportswear company—has agreed to pay approximately $400 million to resolve a shareholder lawsuit over alleged improper sales-related disclosures. Here, our Miami shareholder litigation lawyer discusses the allegations, the legal issues, and the settlement agreement in more detail.

Background: Shareholder Allege Under Armour Made Improper Sales Data Disclosures 

Under Armour faced a lawsuit filed by a group of shareholders who alleged that their rights were violated. Notably, the shareholder complaint—which was filed in a federal court in Maryland—argued that the company improperly manipulated sales figures across quarters to maintain a misleading appearance of consistent 20 percent year-over-year revenue growth. Beyond that, the lawsuit also emphasized that  Under Armour had been under investigation by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) and the company failed to disclose the investigation to investors.

 Shareholders Rely On the Representation of Corporate Officers and Directors 

By the inherent nature of the relationship, shareholders are required to put a tremendous amount of faith into the hands of corporate officers and corporate directors. Indeed, shareholders are required to rely on the integrity and transparency of corporate officers and directors. The reliance is fundamental: These corporate leaders are responsible for making strategic decisions that impact the company’s performance and shareholder value. Any material misrepresentations of material omissions by officers and directors can contribute to significant financial losses for shareholders. A shareholder lawsuit may be pursued as either a:

• Direct Shareholder Action: A direct shareholder action is a lawsuit filed by a shareholder against the corporation, its executives, or its board members for harm that has directly affected the shareholder. It is a cause of action that seeks remedy for personal harm that the shareholder claims to have suffered from the mismanagement, fraud, or other wrongful acts
• Derivative Shareholder Action: A derivative shareholder action is a lawsuit filed by a shareholder on behalf of the corporation against third parties—typically insiders such as executives or directors. It allows shareholders to step into the corporation’s shoes to seek redress for wrongs that have injured the corporation itself

Settlement Reach: Under Armour Will Pay Approximately $400 Million 

In June 2024, Under Armour agreed to a $400 million settlement. This decision follows allegations of financial misconduct involving the manipulation of sales data to artificially enhance its financial reports. The settlement represents a substantial financial commitment from Under Armour to resolve these allegations and restore investor confidence. The preliminary settlement agreement, which is still subject to federal court approval, halts a trial that was set to start in July.

 Speak to Our Miami, FL Shareholder Litigation Attorney Today

At Pike & Lustig, LLP, our Miami shareholder litigation attorneys have the professional expertise that clients can rely on. If you have any questions about a shareholder dispute, please do not hesitate to contact us today for a completely confidential. Our firm provides shareholder dispute representation to clients throughout Southeastern Florida, including in Miami, Miami Beach, Hialeah, Fort Lauderdale, Boca Raton, Palm Beach Gardens, West Palm Beach, and Jupiter.

Source:

cnn.com/2024/06/21/business/under-armour-to-settle-lawsuit-over-sales-disclosures/index.html