Maryland-Based Clothing Company Faces Lawsuit from Shareholder Over Lack of Transparency
When most people think of business disputes, the first thing that comes to mind is business partners having a falling out. For example, maybe one partner uses company funds for personal expenses, and when the other partners find out, they take him to court about it. In other business disputes, one partner wants to buy out the other partner’s share, but they disagree about how much money that will involve. Some business disputes involve former business partners setting up competing companies in the same geographic area. These are not the only kinds of business disputes that business law attorneys can help you resolve, though. Business owners also have legal obligations to their shareholders, and if the company is not transparent with its shareholders about its business dealings and financial situation. If you are a party in a dispute between a shareholder in a company, on the one hand, and its owners, on the other, contact a Maryland business law attorney.
The Shareholder’s Lawsuit Against Under Armour
The Maryland-based company Under Armour gained so much success with its sports apparel that many people began to use the company’s name generically for long-sleeved, form-fitting shirts to be worn under T-shirts during outdoor workouts in cold weather. In recent years, though, the company’s fortunes appear to have waned. In November 2019, the Securities and Exchange Commission (SEC) and the U.S. Department of Justice both revealed that they had been conducting investigations into Under Armour’s accounting practices for two years. This was enough to cause the shareholders to worry, but like so many other companies that make consumer products, the coronavirus pandemic has only worsened Under Armour’s fortunes; 2020 has not been a good year to invest in anything besides masks, hand sanitizer, toilet paper, and grocery items.
The investigations into Under Armour’s finances intensified in July 2020. On July 22, SEC issued a warning known as a Wells Notice to Kevin Plank and David Bergman, the CEO and chief financial officer of Under Armour, respectively. The notice alleged that the company had violated federal securities laws. When news of the notice became public, Under Armour stock prices plummeted 19 percent in one day.
In September 2020, Dale Olin, an Under Armour shareholder who lives in New Jersey, filed a lawsuit against 11 people involved in Under Armour’s governance. He alleges that, for several years leading up to the drop in stock prices, the company was not transparent with its shareholders about how well it was doing in terms of sales. In the lawsuit, he requests corporate governance reforms and compensatory damages. Plank and Bergman are defendants in the lawsuit, as is Patrik Frisk, who previously served as chief financial officer; the lawsuit also names eight Under Armour board members as defendants.
Let Us Help You Today
As a shareholder in a company, you have a right to accurate information about the company in which you hold stock. A Washington DC small business lawyer can represent you in a dispute between a business and its shareholders. Contact Tobin O’Connor Concino P.C. in Washington for help with your case.