A publicly traded apparel company settled SEC charges for failing to disclose the impact of its revenue management practices on revenue growth, resulting in materially misleading public statements.
In the Cease-and-Desist Order, the SEC found that the company engaged in a "pull forward" management strategy, in which the company asked customers who had requested shipment of the product in a future quarter to accept shipment in the current quarter. The SEC stated that the company's failure to disclose the effect of its pull-forward practice on future revenue "rendered statements it made misleading."
As a result, the company violated SA Sections 17(a)(2) and 17(a)(3) ("Fraudulent Interstate Transactions"), SEA Section 13(a), and Rules 13a-1 ("Requirements of Annual Reports"), 13a-11 ("Current Reports on Form 8-K"), 13a-13 ("Quarterly Reports on Form 10-Q") and 12b-20 ("Additional Information") thereunder.
To settle the charges, the company agreed to (i) cease and desist from future violations and (ii) pay a $9 million civil penalty.
Primary Sources
- SEC Press Release: SEC Charges Under Armour, Inc. with Disclosure Failures
- SEC Order: Under Armour, Inc.
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