SEC Investigating Herbalife for FCPA Violations in China

On January 20, Herbalife Ltd., a Los Angeles-based maker of nutritional supplements and weight management products, disclosed in a Form 8-K filing that it is being investigated by the SEC in connection with the company’s activities in China.  Herbalife said it is also conducting its own review and “has discussed the SEC’s investigation and the company’s review with the Department of Justice.”  It also said it is cooperating with the SEC but “cannot predict the eventual scope, duration, or outcome of the matter at this time.”

The announcement comes months after Herbalife agreed last July to pay $200 million in consumer redress to settle Federal Trade Commission allegations that it operated a pyramid scheme and “deceived consumers into believing they could earn substantial money selling diet, nutritional supplement, and personal care products.”  The FTC deal also required Herbalife to “fundamentally restructure” its multi-level marketing operations and compensation structure.