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SEC v. Nature's Sunshine Products, Inc., Douglas Faggioli, and Craig D. Huff

 
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Nature's Sunshine Products, Inc. - Nature's Sunshine Products, Inc.
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SEC Civil
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July 31, 2009
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SEC v. Nature's Sunshine Products, Inc., Douglas Faggioli, and Craig D. Huff
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SEC v. Nature's Sunshine Products, Inc. et al., No. 09-0672 (D. Utah 2009)
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The SEC charged that the conduct of Nature's Sunshine violated the securities fraud provisons Section 10(b) of the Exchange Act, in addition to the FCPA.
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Manufacturing-Other/Multi
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Brazil
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2000; 2001; 2002
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Customs officials in Brazil
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Nature's Sunshine Products, Inc. ("NSP") settled this action with the SEC without admitting or denying the following facts alleged in the SEC's complaint. NSP manufactures and sells nutritional and personal care products. Brazil became NSP's largest foreign market soon after it established a wholly-owned subsidiary in Brazil, Nature's Sunshine Productos Naturais, Ltda. ("NSP Brazil"), in 1994. In 1999 and 2000, the Brazilian government reclassified specified vitamins, herbal products, and nutritional supplements as medicines, which required companies selling those products to register them for importation and sale in Brazil. NSP Brazil was unable to register some of its products and consequently experienced a sharp decline in sales. In an effort to circumvent the new registration requirements, NSP allegedly made over $1 million in undocumented cash payments to customs brokers. Some of these "importation advances" were allegedly paid to Brazilian customs officials to allow NSP Brazil to import unregistered products.
NSP controllers, one of whom was a former corporate officer and the corporate controller, allegedly conducted interviews with NSP Brazil's employees in December 2000. NSP Brazil's operations manager allegedly discussed the cash payments and the fact that NSP Brazil was selling unregistered products. Nevertheless, the payments were allegedly improperly recorded in NSP Brazil's books and records and later accounted for in NSP's 2001 financial statements as though they were legitimate import expenses. Due to the misleading financial statements created by this improper accounting, the SEC charged NSP with securities fraud and making false SEC filings in addition to FCPA violations.
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Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
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Securities Fraud
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Civil penalty, Civil Settlement, Injunction/Cease and desist
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Nature's Sunshine Products, Inc. paid a $600,000 civil penalty; Faggioli and Huff each paid an additional $25,000 civil penalty.
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600,000
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0
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Issuer
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U.S.
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Customs Clearance
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Not stated.
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Cash
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Customs Broker or Agent/Consultant
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1,000,000
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Brazil
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No