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Under Armour shareholders allege company falsely inflated prices

Under Armour CEO Kevin Plank (File)

Under Armour CEO Kevin Plank (File)

A proposed class of Under Armour shareholders filed suit Friday claiming the company made false and misleading statements and failed to disclose facts that artificially inflated stock prices between April 2016 and last month.

The lawsuit, filed in U.S. District Court in Baltimore, alleges violations of the Securities Exchange Act and Securities and Exchange Commission rules. The plaintiffs also name CEO Kevin Plank and former Chief Financial Officer Chip Malloy as defendants.

The Baltimore-based sports apparel company has “touted its aspirations to continue growing 20 percent annually,” according to the complaint, but overall sales grew just 12 percent in the fourth quarter of 2016. The company announced last month weaker-than-expected earnings and that Malloy would be stepping down after 13 months as CFO.

Plank “saw the writing on the wall” and last April began selling more of his stake in the company to limit his loss while still maintaining control, according to the complaint. After the transactions occurred, Under Armour’s growth began to slow after department store closures and the bankruptcy of The Sports Authority.

The members of the proposed class, those who purchased stock between April 2016 and last month, allege they were damaged by the conduct.

The lawsuit was filed by Brower Piven PC, a Baltimore County law firm which specializes in shareholders’ lawsuits. The firm represented Under Armour shareholders in a 2015 lawsuit that challenged changes in the company’s stock structure and reached a settlement requiring compensation for potential loss of value to certain shareholders.

The case is Brian Breece et al. v. Under Armour Inc. et al., 1:17cv00388.

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