The North East Scotland Pension Fund (NESPF) has struck a $434m deal with American sports apparel giant, Under Armour. The significant arrangement contributes bridge funds to the pension scheme of NESPF’s 71,000 members, fortifying their financial future.
The agreement comes in the wake of NESPF’s allegations of suffering over £6m in losses due to misleading product details provided by Under Armour. The pension fund had previously procured a considerable volume of Under Armour’s shares, only to experience a significant financial setback triggered by incorrect product information.
The settlement transpired just weeks ahead of a scheduled jury trial in the U.S. With NESPF spearheading the class-action lawsuit against Under Armour, the monumentally large compensation payout is seen as an implicit acknowledgment of the investor’s grievances despite Under Armour’s prior denial of any wrongdoing.
Mark Solomon, NESPF’s leading lawyer, regards the settlement as a stern reminder to public corporations about the essential function pension funds play in ensuring business ethics and compliance. He argued that such pension funds also serve as corporate conduct watchdogs, assuring that companies fulfill their legal responsibilities and maintain ethical operations.
Despite adamantly denying fault throughout the trial, Under Armour opted for a settlement to sidestep the exorbitant costs and vagueness linked to protracted legal proceedings. The settlement extends to accusations made by share purchasers representing Under Armour between 16 September 2015 and 1 November 2019.
Under Armour plans to implement necessary changes and devise preventative measures against similar difficulties.
Under Armour’s $434m NESPF settlement details
The company affirmed an overhaul of its disclosure protocols and added an employee guidelines clause to its Code of Conduct about reporting violations related to disclosure controls.
The definitive agreement also ensures that repayments made to the claimants will not disturb the company’s ordinary operations, part of which is handled by the company’s insurance. Under Armour vows to maintain transparency by summarizing the changes conducted, ultimately aimed at restoring the trust of the shareholders.
Mehri Shadman, Under Armour’s chief legal officer, reasserted the company’s adherence to appropriate sales tactics, accounting practices, and disclosures. Shadman argued that the resolution would end an issue spanning seven years while supplying the business with the expected certainty. Ultimately, the settlement aims to bring closure and refocus on the company’s strategic objectives without further legal interruptions.
