NIKE SUED FOR ‘MISSTATEMENTS’
Byline: Vicki M. Young
NEW YORK — A Nike shareholder last week filed a lawsuit charging federal securities law violations against the company and some of its executives in a federal district court in Oregon.
The lawsuit was filed by Mel Atlas, who is also seeking class-action status. The named defendants are: Nike Inc.; Philip Knight, founder, chairman, president and chief executive officer; Thomas Clarke, president, new business ventures; Mark Parker, vice president, global footwear; and Gary DeStefano, president, Asia Pacific region.
A Nike spokeswoman said: “We have obtained a copy of the complaint. We believe that the material obligations are without merit. We have obtained outside counsel and we will vigorously defend our position.”
According to the lawsuit, the defendants were charged with making “material misstatements and omissions” between Dec. 20, 2000 and Feb. 26, 2001. The complaint further alleged that the executives had known that Nike was having inventory and production problems since the summer, but didn’t disclose the information until Feb. 26 when the company issued a revised third-quarter and fiscal-year 2001 guidance report. The defendants, court papers said: “knew or recklessly disregarded” the fact that the alleged omissions would adversely affect the market for Nike common stock and “would artificially inflate or maintain the price of such stock.”
The problems referred to in the lawsuit centered on supply chain issues, where some footwear models had “significant amounts of excess inventory” and other models “have been in short supply or delivered late.”
The lawsuit also said that the defendants, with the exception of Knight, sold “hundreds of thousands of shares of Nike common stock at prices artificially inflated by the misleading statements.”
Clarke, the lawsuit stated, sold a total of 302,288 shares of Nike stock in two stock transactions in December for a total of $10.4 million; Parker sold a total of 40,000 shares in December and January for a total of $1.5 million; while DeStefano sold 49,000 shares in January and received $655,041 in the transaction. In each of the transactions, according to court documents, the stock price was at least $48.43 a share. The price of Nike stock on Dec. 19 was around $47.56 on the New York Stock Exchange. On Feb. 26, the stock closed at $39.60, the same day that the defendants issued an earnings guidance after the market closed.
The plaintiff is seeking costs and unspecified damages.