Sources have told The Wall Street Journal that Baltimore-based Under Armour Inc. is at the center of a federal investigation for its accounting practices.
The probe, which hasn't been publicly announced, is being coordinated by civil investigators at the Securities and Exchange Commission (SEC).
The announcement of the probe via The Journal comes one day before Under Armour reports Q3 results on Monday.
Investigators are examining "revenue-recognition practices, authorities generally focus on whether companies record revenue before it is earned or defer the dating of expenses to make earnings appear stronger, among other possible infractions," The Journal noted.
Under Amour shares have crashed more than -60% in the last 17 quarters on weak apparel sales.
The investigation comes several weeks after Kevin Plank, founder/CEO, stepped down from the helm, and perhaps most suspiciously, The Journal reports that Under Armour had three CFOs from 2016 to 2017.
Brad Dickerson, who had served as CFO since 2008, left the company in February 2016.
Chip Molloy, a former PetSmart Inc. executive, took over but stayed a year on the job. Under Armour at the time cited unspecified personal reasons for his departure.
David Bergman was named acting finance chief in February 2017, after the company reported its quarterly sales miss and Mr. Molloy’s exit. Mr. Bergman, who has worked at Under Armour since 2004 in various finance roles, was named permanent CFO in December 2017.
Makes one wonder just what the 'outsider' CFO saw to depart so quickly.
The apparel company has spent two years restructuring operations, in the attempt to turn the tide and increase sales. Still, nothing seems to work as their North American segment continues to sink.
Last year, Plank and top executives were exposed by The Journal for using company funds at strip clubs in Baltimore.
What The Journal missed, which was an even more important story, is that Plank and top executives hosted wild parties at his 18 million dollar farm in Baltimore County. All of the partying has been suspected to be on the company's dime.
Plank and his brother, Scott Plank, sold company stock over the years to expand their real estate empire, called Sagamore Development Company. The brothers dumped company stock and built an exotic hotel, and a whiskey distillery as the market capitalization of the company was halved.
After the #MeToo movement hit Under Armour in 2018, mainly because lower-level staff, women staff to be exact, complained about a highly toxic male environment in management, it now seems that one year later, with Plank out the door and the company currently under federal investigation for its accounting practices -- sh*t is hitting the fan.
With the company imploding and now a federal investigation underway, it seems that one local investor has "rang" Plank's doorbell this evening in the attempt to see the accounting books. Does this mean a run on the stock is coming?