Sports firm ‘lost us £6.5m from council pension fund’
A sCOTs council is taking Us sports giant Under Armour to court over claims the firm’s alleged misconduct led to losses of more than £6.5million.
The North East scotland Pension Fund (NEsPF), which administers schemes for more than 70,000 public sector workers in Aberdeenshire and Moray, bought more than £20million of Under Armour stock five years ago.
The share price of the company based in Baltimore, Maryland, plunged and the sportswear giant’s practices are now being investigated by Us authorities.
Aberdeen City Council is the lead plaintiff in a Us Court lawsuit against Under Armour where it is seeking damages.
Legal documents obtained by the scotland on sunday newspaper say the pension fund suffered losses of ‘more than £6.5million’ due to the firm’s alleged misconduct.
Under Armour appeared to be one of the world’s best-performing sportswear firms, with 20 per cent growth between 2010 and 2016.
It struck extensive deals with teams and players and rivalled Nike and Adidas.
Global expansion followed with sponsorship deals secured with elite sports stars including sir Andy Murray.
The success of the company prompted pension firm managers to invest in it believing it would achieve a good return.
Documents obtained by the paper claim to show that over the course of 2016, the NEsPF acquired more than 815,000 of its class A and class C shares. The fund bought more than $28.78million (£20.3million) worth of Under Armour stock over the period. But the stock price plummeted and NEsPF was forced to sell hundreds of thousands of shares for less than half the amount it paid for them. Lawyers for Aberdeen City Council argue that while Under Armour grew and the pension fund acquired shares the firm was ‘actively concealing’ its problems.
Legal representatives say ‘improper’ accounting practices were used to preserve its ‘carefully cultivated image as a fast growing, premium sports brand’. A complaint alleges that Under Armour’s ‘concealed’ practices included pulling forward sales from future quarters to artificially boost revenue.
It also claims that the firm’s founder and then CEO, Kevin Plank, ‘personally cashed in’ on the artificial inflation of the firm’s share price. Under Armour reportedly rejected the allegations as being without merit and said its disclosures and accounting practices have been ‘entirely appropriate’.
Aberdeen City Council is taking action because it is the administering authority of the NEsPF and its legal adviser.
Any losses suffered by the pension fund, a fund spokesman said, do not impact on individual pension values or rights.
NEsPF and Aberdeen City Council said they could not comment on an ongoing case.
Under Armour’s global headquarters in the Us was asked to confirm the legal case but did not respond.
‘Carefully cultivated’