Under Armour receives Wells notice that company and CEO could face civil charges
Posted July 27, 2020 9:35 a.m. EDT
CNN — Under Armour's two highest-ranking executives received a notice that they could face civil charges for past accounting practices.
In a regulatory filing Monday, the sportswear company said the US Securities and Exchange Commission sent a "Wells Notice" on July 22 to its former CEO Kevin Plank, who also serves as its executive chairman, and its Chief Financial Officer David Bergman.
The notice relates to they way it recorded sales between the third quarter of 2015 and the fourth quarter of 2016. The company used a "pull forward," which is when it registered a "customer sale that is executed earlier than originally planned," according to the filing. That's usually done to meet sales objectives.
Under Armour clarified in the filing that the notice is "neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law" and the SEC has not found accounting violations from any other period.
"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.
Under Armour publicly acknowledged last November that it was facing probes from the SEC and the US Department of Justice for "accounting practices and related disclosure." The once-hot company, which has been dealing with years of lackluster sales, said at the time its "accounting practices and disclosures were appropriate."
Shares fell more than 3% Monday.