Marc Leaf Comments on Under Armour’s “Wells Notice”

Corporate partner Marc Leaf was quoted by Compliance Week about Under Armour revealing that its accounting practices are the subject of a pending enforcement action by the Securities and Exchange Commission (SEC).

On July 22, Under Armour and two of its executives received “Wells notices” from the SEC related to a previously disclosed probe by the agency, the company said in an 8-K filing on July 27.

Leaf told Compliance Week that a Wells Notice marks the end of the SEC’s investigation. The company now has a chance to explain why the enforcement action should not move forward through a Wells submission.

"In some cases, a compelling Wells submission may convince the staff not to recommend an enforcement action to the Commission. But even if the staff goes ahead with a recommendation, only the Commission itself has the authority to commence an enforcement action, and the Wells process gives the potential defendant an opportunity to take its own arguments directly to the commissioners," Leaf said.

"As a result, a significant number of investigations that result in the delivery of a Wells notice do not actually result in enforcement action by the Commission," he added.