Under Armour is to pay out $434m (£343m) to resolve a 2017 class action lawsuit that alleged the sportswear giant misled shareholders about its revenue growth projections.
The lawsuit accused Under Armour and its CEO Kevin Plank of providing deceptive information regarding the company’s financial status in order to meet Wall Street forecasts.
The proposed agreement, which is still pending court approval, will avoid a trial that was planned for July, according to Reuters.
Back in 2021, Under Armour settled with the Securities and Exchange Commission (SEC) for $9m (£7.1m). The SEC found that the Baltimore-based company had failed to inform investors about a practice of “pulling forward” $408m (£322m) in orders during the latter half of 2015 to boost its reported revenue figures.
“This is an important win for investors and a strong message to the directors and officers of public companies,” says Mark Solomon, lead counsel for the shareholders and a partner at Robbins Geller Rudman & Dowd.
Under Armour says it plans to fund the settlement using both its available cash reserves and its $1.1bn (£870,000) revolving credit facility. The company also disclosed in a regulatory filing that it will maintain the separation of the roles of chair and CEO for at least three years.
Though it agreed to the settlement, Under Armour is standing firm in denying all allegations of wrongdoing, describing the settlement as a strategic decision to avoid the uncertainties of litigation rather than an admission of fault.
Under Armour anticipates its total legal contingencies related to this lawsuit to amount to $434m by the first quarter of fiscal 2025, up from $100m at the close of 2024.
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