Shares of Adidas AG (ADDYY) are down 2.74% to $110.68 on heavy volume in early afternoon trading after Federal prosecutors in the United States charged four NCAA basketball coaches and a marketing professional with ties to the sportswear group with corruption.
One of the names reported in the complaint was James Gatto, who is described on his Linkedin page as Director of Global Sports Marketing - Basketball for the German group. Adidas was not immediately able to confirm his employment when contacted by TheStreet, however, the Gatto name has a long association with the brand in amateur and top-flight college athletics in the United States.
The stock had fallen to the bottom of the German market in Frankfurt on Tuesday.
Gatto was accused of "making and concealing bribe payments to high school student-athletes and/or their families in exchange for, among other things, the student-athletes' commitment to play basketball" at specific universities, according to the complaint.
"Moreover, many such coaches have enormous influence over the student-athletes who play for them, in particular with respect to guiding those student-athletes through the process of selecting agents and other advisers when they prepare to leave college and enter the NBA," the complaint said.
Adidas shares were marked 2.3% lower by the end of the session at €188.35 each against a broader 0.13% gain for the DAX performance index benchmark. So far this year, Adidas shares have gained 25.1%, nearly five times better than that of rival Nike Inc. (NKE) - Get Report
The investigation could impact Adidas' drive into the U.S. market, where it has continued to grow at a faster pace than Nike: last month, Adidas said North American sales grew 29% to €1.014 billion, with the bulk of that total (€915 million) coming from Adidas-branded merchandise. Nike's total U.S. sales in its last fiscal quarter, which ended on May 31, were flat compared to the comparable period last year at $3.753 billion.
Others name in the probe were Oklahoma State University assistant coach Lamont Evans, Auburn associate head coach Chuck Person, USC associate head coach Tony Bland and University of Arizona assistant Emanuel Richardson.
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