In re Under Armour Sec. Litig.
Case Summary
Second Largest Ever Securities Class Action Recovery in the Fourth Circuit and One of the Top 50 Largest Securities-Related Recoveries in U.S. History
Robbins Geller secured a $434 million recovery for investors in a securities fraud class action suit against Under Armour and CEO Kevin Plank. Critically, the settlement includes governance reforms, including a three-year separation of the Chairman and CEO roles, to cure investors’ concerns about the role of the company’s founder in the underlying fraud allegations. The settlement is one of the top 50 securities class action recoveries of all time, coming just three weeks before a jury trial was scheduled to begin in U.S. federal court in Baltimore. North East Scotland Pension Fund led the action as lead plaintiff on behalf of the investor class. The case alleged that Under Armour, Inc. and CEO Kevin Plank violated U.S. securities law by making materially false and misleading statements and failing to disclose adverse information about Under Armour’s business and operations to investors.
“This is an important win for investors and a strong message to the directors and officers of public companies,” said Mark Solomon, a Robbins Geller partner and counsel to the lead plaintiff. “Prior government enforcement efforts yielded a modest $9 million penalty. Obtaining a recovery over 48 times greater underscores the critical role pension funds can play in holding companies accountable.”
The allegations focus on Under Armour’s alleged “pull-forward” revenue recognition scheme that masked declining demand for its products. Investors had been repeatedly assured, according to the allegations in the suit, that Under Armour’s 26-consecutive quarter 20% year-over-year revenue growth streak was “safely intact,” when demand for the company’s products was in decline. In 2017, Under Armour revealed its lower than anticipated fourth quarter revenues and a drop in quarterly revenue growth of over 20% for the first time in 26 quarters. The company also announced the unexpected resignation of its CFO after only 13 months on the job. After this news was made public, the price of Under Armour shares fell over 25%. The investor suit followed.
The Under Armour case is a unique example of persistence and creativity. In 2019, the case was dismissed with prejudice and on appeal before the Fourth Circuit, when The Wall Street Journal broke news that both the SEC and Department of Justice were investigating similar allegations. Robbins Geller filed a motion for an indicative ruling in the District of Maryland stating that the district court would revive the case if the Fourth Circuit remanded it. After the Fourth Circuit remanded the case and while the defendants’ renewed motion to dismiss was pending, the SEC investigation concluded with a cease and desist order and a $9 million civil penalty for Under Armour. Robbins Geller continued to prosecute its case in the District of Maryland, defeating the motion to dismiss, obtaining class certification, and ultimately achieving the $434 million settlement in 2024, 48 times larger than the civil penalty Under Armour paid to the SEC.
The Under Armour settlement was called a “home-run” and “eye-popping” in the financial press.
“Our trial team was looking forward to trying the case to a jury. The readiness of our team to try the case and do so effectively was instrumental in helping us obtain this outsized recovery,” said Robert R. Henssler, Jr., Robbins Geller partner and lead trial counsel.
The following Robbins Geller attorneys represented investors in this case: Matthew I. Alpert, Stephen R. Astley, Michael J. Dowd, T. Alex B. Folkerth, Luke Goveas, Robert R. Henssler, Jr., Christopher R. Kinnon, Andrew T. Rees, Sam S. Sheldon, Elizabeth A. Shonson, Mark Solomon, and Megan M. Sonney.
In re Under Armour Sec. Litig., No. 1:17-cv-00388-RBD (D. Md.).