You have probably heard that Under Armour announced that it is under investigation by the SEC and the DOJ. I read two articles: one on Business Insider and one on CNBC. The Wall Street Journal revealed the investigations this past Sunday.
Apparently, the investigation involves whether the company shifted sales from one quarter to another quarter to make the company appear healthier or to smooth earnings. But requests for the company’s documents began in 2017. That seems to be an awful long time to investigate quarterly or annual cutoffs, whether the accounting processes or practices were incorrect, if error or mistake, if any, was simple neglect or more egregious conduct, the people who had involvement, the possible allegations of wrongdoing, and how to correct or remedy the situation if there was any error or mistake.
Separate from the investigations, a question also may arise whether the company was required to report or disclose the investigations at an earlier time – I am assuming that the company was advised by legal counsel on that issue.
As the government’s requests for documents began in 2017, certainly there must also have already been an internal investigation by the audit committee, and certain correcting measures taken if necessary.
I only read the news reports – that’s all that I know, but it seems to me that the government is taking a long time to investigate quarterly or annual accounting and revenue cutoffs and the people who were involved.
Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.
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Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only.
I am also the Chair of the Business Law Section of the Bar Association of San Francisco.
Blogs: Trust, estate/probate, power of attorney, conservatorship, elder and dependent adult abuse, nursing home and care, disability, discrimination, personal injury, responsibilities and rights, and other related litigation, and contentious administrations http://californiaestatetrust.com; Business, D&O, board, director, audit committee, shareholder, founder, owner, and investor litigation, governance, responsibilities and rights, compliance, investigations, and risk management http://auditcommitteeupdate.com
My law practice primarily involves the following areas and issues:
Probate Court Disputes and Litigation
- Trust and estate disputes and litigation, and contentious administrations representing fiduciaries and beneficiaries; elder abuse; power of attorney disputes; elder care and nursing home abuse; conservatorships; claims to real and personal property; and other related disputes and litigation.
Business and Business-Related Disputes and Litigation: Private, Closely Held, and Family Businesses; Public Companies; and Nonprofit Entities
- Business v. business disputes including breach of contract; unlawful, unfair and fraudulent business practices; fraud, deceit and misrepresentation; unfair competition; breach of the covenant of good faith and fair dealing; etc.
- Misappropriation of trade secrets
- M&A disputes
- Founder, officer, director and board, investor, shareholder, creditor, VC, control, governance, decision making, fiduciary duty, conflict of interest, independence, voting, etc., disputes
- Buy-sell disputes
- Funding and share dilution disputes
- Accounting, lost profits, and royalty disputes and damages
- Access to corporate and business records disputes
- Employee, employer and workplace disputes and processes, discrimination, whistleblower and retaliation, harassment, defamation, etc.
Investigations and Governance
- Corporate and business internal investigations
- Board, audit committee and special committee governance and processes, disputes, conflicts of interest, independence, culture, ethics, etc.
The following are copies of the tables of contents of three of the more formal materials that I have written over the years about accounting/auditing, audit committees, and related legal topics – Accounting and Its Legal Implications was my first formal effort, which resulted in a published book that had more of an accounting and auditing focus; Chapter 5A, Audit Committee Functions and Responsibilities, for the California Continuing Education of the Bar has a more legal focus; and the most recent Tate’s Excellent Audit Committee Guide (February 2017) also has a more legal focus:
Accounting and Its Legal Implications
Chapter 5A, Audit Committee Functions and Responsibilities, CEB Advising and Defending Corporate Directors and Officers
Tate’s Excellent Audit Committee Guide
The following are other summary materials that you might find useful:
From a prior blog post which you can find at https://wp.me/p75iWX-dk if the below scan is too difficult to read:
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