Under Armour Inc (NYSE:UA) has agreed to a $434 million settlement to resolve a 2017 class action lawsuit accusing the company of misleading shareholders about its revenue growth to meet Wall Street expectations.
The deal, pending court approval, avoids a trial that was set for July 15 in Baltimore federal court.
The suit claimed that Under Armour and its CEO, Kevin Plank, deliberately misled investors regarding the company's financial status.
In 2021, Under Armour paid $9 million to settle charges from the Securities and Exchange Commission (SEC) that it misrepresented its revenue growth.
The SEC investigation revealed that the company had failed to disclose its use of a sales tactic to "pull forward" $408 million in orders during the latter half of 2015.
Mark Solomon, the lead counsel for the shareholders, praised the proposed settlement as a significant victory that highlights the critical role of pension funds in holding corporations accountable.
Under Armour plans to fund the $434 million deal using its cash reserves and by tapping into its $1.1 billion revolving credit line. The company also announced that it will continue to keep the roles of chair and CEO separate for at least three years.