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Best week, worst week: Plank gets boost in new Under Armour stock; AG goes after ‘Money Guy’

Under Arnour’s addition of non-voting C Class shares this week further strengthened  founder and CEO Kevin A. Plank’s control of the sporting goods manufacturer while the  Maryland Attorney General’s office is lookiing to put investment adviser and infomercial star Philippe Rousseaux and his Towson firms out of business.

Legal afairs writer Danny Jacobs wrote this week that three days after Under Armour announced a proposed change in its stock structure, a shareholders’ lawsuit was filed seeking to prevent the plan from proceeding. The potential class-action lawsuit, filed Thursday in Baltimore City Circuit Court, alleges the change will “entrench” founder and CEO Kevin A. Plank even if “his performance in office begins to deteriorate.”

The company’s board of directors approved a plan that would give current shareholders a new, non-voting Class C share for each Class A or Class B share they currently own. The change needs to be approved by shareholders in an Aug. 26 meeting to go into effect.

Plank holds more than 90 percent of the Class B stocks, which have 10 times the voting power of Class A shares, giving him two-thirds of the voting shares despite just holding less than 17 percent of the overall stock.

Adding a third class would allow Plank to continue to sell shares while exceeding the 15 percent cutoff — permitting him to maintain control over the company’s future while Under Armour continues to expand.

The lawsuit alleges the board of directors “did not obtain meaningful safeguards in exchange for the extraordinarily valuable benefit that is being bestowed upon Plank at the expense of public shareholders.”

Meanwhile, legal affairs writer Steve Lash reported that Maryland Attorney General Brian E. Frosh wants to put investment adviser and infomercial star Philippe Rousseaux and his Towson firms out of business.

Frosh alleges in an administrative filing that Rousseaux, either independently or through his Everest financial companies, has misled clients about service charges and the firms’ stock market successes and falsified forms intended to protect investors when transferring assets.

Frosh seeks revocation of Rousseaux’s registration as an investment adviser representative in Maryland and a prohibition on him and his two firms — Everest Wealth Management Inc. and Everest Investment Advisors Inc. – from operating in the securities or investment advisory business in Maryland.

On Wednesday, Maryland Securities Commissioner Melanie Senter Lubin signed an order requiring Rousseaux to respond to the claims by early July and state whether he seeks a hearing before the commission. Failure to respond will result in a subsequent order revoking Rousseaux’s registration and barring him and his companies from operating in the state, Lubin’s signed order stated.

Rousseaux, whose “Money Guys” advertisements run on Baltimore-area television, and his two companies issued a statement Thursday afternoon denouncing Frosh’s allegations.

In the administrative filing, Frosh alleges Rousseaux and EIA “falsely represented to investors” that the company’s “wrap fee” investment program enabled them to invest in certain products without being charged brokerage commissions or transaction fees. But the attorney general said the securities division found in March 2014 that clients were being charged transaction fees of about $8,000.

Advertisements for the wrap-fee investments also included “false and misleading” information by using outdated data of investment returns and failing to depict how clients fared relative to their initial and subsequent investments, Frosh claims.