Kevin Plank, CFO Named in SEC Probe Investigating Under Armour
Federal regulators have reportedly escalated their investigation into Under Armour’s accounting practices related to sales booked between the third quarter of 2015 and fourth quarter of 2016 regarding the use of “pull forward” sales with revenue in the latest development in the nearly year-long investigation. The SEC officially moved forward with an investigation beginning last November, shortly after former CEO Kevin Plank resigned from the company he once founded in 1996.
Plank, along with current CFO David Bergman, received Wells notices from the SEC last Wednesday and released in their 8-K filing on Monday. While a Wells notice isn’t a formal indictment of charges brought against them, rather informing the company and executives that a preliminary determination to recommend action was made, it serves as the latest bit of bad news for Under Armour as they struggle to retain their foothold within the apparel sector.
"The company and the executives maintain that their actions were appropriate and intend to pursue the Wells Notice process, which will include the opportunity to respond to the SEC staff's position, and also expect to engage in a dialogue with the SEC staff to work toward a resolution of this matter," the company said in a statement on Monday.
Under Armour has already spent recent weeks reducing their partnerships among colleges across the country as they have already severed ties with University of California Berkeley, while rumors of a discontinued partnership with Boston College and UCLA have lingered in recent weeks. The apparel conglomerate still holds parternships with Auburn, Maryland, Northwestern, Notre Dame, South Carolina, Texas Tech and Wisconsin among others as they continue to evaluate their business ventures. Despite remaining in the green following Tuesday’s market open, there is no denying the lack of success has been alarming for a company that was once a strong rival to Nike in the Americas.
Under Armour shares are down nearly 52% since January 2 and reported a $590 million net loss during Q1 of 2020 as they announced a cost-cutting plan in April that included 6,700 employees laid off while closing all 188 stores. Under Armour is set to release Q2 earnings on Friday before market open.