Posted 20 April 2020
Global direct sales company Herbalife Nutrition Ltd. has recently extended its decades-long record of being the subject of regulatory actions.
- Last year, it agreed to pay $20 million to settle Securities and Exchange Commission (SEC) charges that it made false and misleading statements in numerous U.S. regulatory filings about the compensation model for its China-based service providers. SEC alleged that the actual model used is multilevel and based on downline purchases rather than hours worked. While direct selling is permitted in China, multilevel marketing is not. SEC found that Herbalife’s misleading statements deprived investors of the information they needed to fully evaluate the risk of investing in Herbalife stock.
Reference: Herbalife to pay $20 million for misleading investors. US Securities and Exchange Commission press release. Sept 27, 2019
- Two former company executives, Yanliang Li and Hongwei Yang, were charged in November on criminal and