Under Armour Founder and CFO are Named in Federal Probe

Shares of Under Armour were falling on Monday after the company’s founder Kevin Plank and CFO David Berman were named in an SEC probe.

The stock was able to recover the losses in extended hours trading with gains of 2.66%.

According to a filing from the athletic wear maker, the company’s founder Plank and CFO Berman received Wells Notices informing them that the U.S. Securities and Exchange Commission is likely to “allege certain violations of the federal securities laws.”

Under Armour also received a notice informing it that the agency may file an enforcement action against the company.

It was last November that Under Armour had said it had been under federal investigation for more than two years.

Under Armour and the executives “maintain that their actions were appropriate,” according to the latest filing. They intend to respond to the Wells Notices and “engage in a dialogue” with the SEC to resolve the matter.

The SEC’s investigation was looking into the timing of Under Armour’s sales, and if the company tried to make them appear stronger than they were.

The Wells Notices intend to bring enforcement actions against them, relate to sales that were allegedly pulled forward during a period from the third quarter of 2015 through the end of 2016, Under Armour said.

The SEC is “focused on the company’s disclosures regarding the use of pull-forward sales in order to meet sales objectives,” but it is not alleging revenue recognition violations, the company said.

Disclaimer: We have no position in Under Armour Inc Class A (NYSE: UAA) and have not been compensated for this article.