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In the Matter of Nu Skin Enterprises, Inc.

 
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Nu Skin Enterprises, Inc.
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SEC Civil
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September 20, 2016
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In the Matter of Nu Skin Enterprises, Inc.
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In the Matter of Nu Skin Enterprises, Inc., Admin. Proc. File No. 3-17556 (2016)
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The SEC’s enforcement action against Nu Skin marks only the second time the Commission has charged a company with violating the FCPA based on a charitable contribution that was intended to influence a foreign official.
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Cosmetics/Personal Care
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China
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2013
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High ranking Chinese Communist Party official; Representatives of a provincial Chinese enforcement authority.
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Nu Skin is a Delaware corporation based in Provo, Utah which manufactures and markets cosmetic and nutritional products. Nu Skin maintains a class of common stock that is registered with the SEC and listed on the New York Stock Exchange.

According to the SEC, in 2013 Nu Skin’s wholly owned Chinese subsidiary (“Nu Skin China”) allegedly violated Chinese domestic laws by hosting an unauthorized promotional event in an unnamed Chinese province. As a result, representatives of the provincial Administration of Industry and Commerce (“AIC”) initiated an investigation which ultimately concluded that Nu Skin China should be fined RMB 1 million ($431,088).

As a result of the AIC’s investigation, Nu Skin China personnel decided to initiate a charity project in the province in an effort to dissuade the AIC from sanctioning the company and protect future business interests. To do so, a Nu Skin China employee contacted an acquaintance, a high ranking Communist party official (“Party Official”), to suggest a charity located in the province. The Party Official recommended a charity that he was responsible for establishing within the province. Nu Skin China subsequently donated RMB 1 million to the charity. In addition, Nu Skin China also facilitated the process of obtaining college recommendation letters from an “influential U.S. person” for the Party Official’s child.

Following the donation, the SEC claims that Nu Skin China sought to contact the Party Official to request that the AIC not name or fine Nu Skin China. Shortly thereafter, Nu Skin China received notice of the AIC’s final decision in which the company was neither charged nor fined. .

On September 20, 2016, the SEC announced that it had settled an enforcement action against Nu Skin for violations of the FCPA’s books-and-records and internal controls provisions. According to the cease-and-desist order, Nu Skin agreed to pay a total sanction of $765,688.
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Books and records (Issuer), Internal controls (Issuer)
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Cease and Desist, Civil penalty, Disgorgement, Prejudgment Interest
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$431,088 in disgorgement, $34,600 in prejudgment interest, $300,000 civil penalty.
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765,688
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0
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Issuer
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U.S.
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United States
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Other Business Advantage
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Not stated.
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Charitable contribution
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Not stated.
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China
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China
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No
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No