Prosecuting Agency:
U.S. Securities and Exchange Commission
Type of Action:
SEC Administrative Proceeding
Docket or Case Number:
3-17556
Name of Prosecuting Attorneys:
Lee Robinson,
Ian Karpel,
Kimberly Greer,
US Assisting Agencies: Unknown
Foreign Enforcement Action/Investigation: Unknown
Foreign Assisting Agencies: Unknown
Origin of the Proceeding:
Unknown
Whistleblower:
Unknown
Case Status:
Resolved
Summary
Nu Skin Enterprises, Inc., a Delaware corporation headquartered in Utah, was in the business of of marketing and manufacturing cosmetic and nutritional products, primarily through direct sales or multi-level marketing means.
Nu Skin (China) Daily Use & Health Products Co. Ltd. (“Nu Skin China”) was Nu Skin's wholly-owned subsidiary incorporated and headquartered in China.
According to the cease and desist order, in 2013, representatives of Nu Skin China held an unauthorized promotional meeting in a city where Nu Skin did not have a license to make direct sales or a physical store location, which was prohibited under China’s direct selling laws. During the course of the subsequent Chinese investigation into the promotional meeting, Nu Skin China became aware that the provincial regulatory body intended to fine Nu Skin China approximately $431,088 for the misconduct. A Nu Skin China employee who was an acquaintance of a high-ranking Communist Party official who could influence the investigation suggested to the official that a donation be made to a charity of his choosing. Shortly thereafter, Nu Skin China made a donation of approximately $154,000 to the unnamed charity, and Nu Skin China was informed that the company would be neither charged nor fined for the misconduct.
On September 20, 2016, the SEC filed a settled administrative cease and desist proceeding against Nu Skin Enterprises alleging violations of the books & records and internal controls provisions of the FCPA. Though agreeing to the settlement, Nu Skin neither admitted nor denied the findings in the order. Under the terms of the order, Nu Skin is prohibited from further violations of the FCPA and was ordered to pay disgorgement of $431,088 plus prejudgment interest of $34,600 and a civil monetary penalty of $300,000.
This is only the second FCPA Group based solely on a charitable donation.
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