## Facts

- Under Armour, Inc. is a publicly traded athletic apparel company whose earnings communications stressed consistent revenue growth and meeting or exceeding analysts’ revenue estimates.
- For 26 consecutive quarters beginning in Q2 2010, Under Armour reported year-over-year revenue growth exceeding 20% and highlighted this streak in earnings calls and releases.
- By the second half of 2015, Under Armour’s internal forecasts for Q3 and Q4 indicated potential shortfalls compared with analysts’ revenue estimates.
- To close gaps between internal forecasts and analysts’ estimates, Under Armour accelerated (“pulled forward”) shipments of products from already-existing customer orders originally requested for delivery in future quarters.
- The SEC did not allege fictitious sales; the concern was the timing and effect of recurring order acceleration on reported period revenues and the public narrative of growth.
- Under Armour did not disclose the existence and use of these pull-forward practices in its public reporting and related narrative disclosures while emphasizing sustained growth and its ability to meet expectations.
- The SEC instituted a settled administrative cease-and-desist proceeding; Under Armour consented to the order without admitting or denying findings (except jurisdiction).

## Issues

1. Whether omitting Under Armour’s use of order pull-forwards to meet revenue expectations made its public statements about revenue growth and performance misleading.
2. Whether the omissions violated Securities Act § 17(a)(2)–(3) and Exchange Act § 13(a) and related reporting and disclosure rules, including requirements governing periodic reports and MD&A disclosures.

## Decision

- The SEC found that Under Armour failed to disclose material information about revenue management practices, rendering its statements misleading.
- The SEC found violations of Securities Act § 17(a)(2) and § 17(a)(3).
- The SEC found violations of Exchange Act § 13(a) and related rules governing issuer reporting and disclosure (including MD&A-related obligations).
- The SEC ordered Under Armour to cease and desist from committing or causing future violations of the cited provisions.
- The SEC imposed a civil monetary penalty (publicly reported as $9 million).

## Legal Principles

- An issuer’s omission of material facts can make affirmative statements misleading, even when reported financial line items reflect real transactions.
- When a company highlights revenue trends, growth, and performance consistency, it must disclose material qualifying information necessary to prevent those statements from being misleading.
- Periodic reporting and MD&A obligations require disclosure of known trends or uncertainties reasonably likely to affect financial condition or results, not merely accurate historical numbers.
- Liability under Securities Act § 17(a)(2)–(3) may be based on negligent misstatements, omissions, or deceptive conduct; scienter is not required.
- The SEC may resolve disclosure-based enforcement matters through administrative cease-and-desist proceedings and impose civil penalties via settlement without admissions.

## Conclusion

The SEC concluded that Under Armour’s undisclosed use of recurring order pull-forwards to meet analysts’ revenue expectations was material in light of its public emphasis on sustained, organic growth, and that the omission made its communications misleading; the matter was resolved through a cease-and-desist order and a civil penalty.


In re Under Armour, Inc., Admin. Proc. No. 3-20278 (S.E.C. May 3, 2021)