The Securities and Exchange Commission filed a settled enforcement against Nature’s Sunshine Products Inc. (NSP), its Chief Executive Officer Douglas Faggioli. 54, and its former Chief Financial Officer Craig D. Huff, 53. According to the SEC, the charges relate to cash payments made in 2000 and 2001 by the Brazilian subsidiary of NSP, a manufacturer of nutritional and personal care products, to import unregistered products into Brazil and the subsequent falsification of its books and records to conceal the payments.
NSP will pay a civil penalty of $600,000; Faggioli and Huff will each pay $25,000.
The SEC’s civil complaint alleges that, faced with changes to Brazilian regulations which resulted in classifying many of NSP’s products as medicines, NSP’s Brazilian subsidiary made a series of cash payments to customs officials to import product into that country and then purchased false documentation to conceal the nature of the payments. The conduct violated the Foreign Corrupt Practices Act, and the antifraud, issuer reporting, books and records and internal controls provisions of the federal securities laws. The complaint also alleges that Faggioli and Huff, in their capacities as control persons, violated the books and records and internal controls provisions of the securities laws in connection with the Brazilian cash payments. NSP also failed to disclose the payments to Brazilian customs agents in its filings with the SEC.
The civil injunctive action filed in the United States District Court for the District of Utah alleges that NSP violated Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 30A of the Exchange Act, and Rules 10b-5, 12b-20, 13a-1 and 13a-13, and that Faggioli and Huff violated Sections 13(b)(2)(A) and 13(b)(2)(B) as control persons pursuant to Section 20(a) of the Exchange Act.
In its own statement, NSP said “no current NSP officers, directors, or employees are alleged to have participated in or had knowledge of any of the improper conduct alleged in the complaint, which occurred approximately eight years ago. . . . Nature’s Sunshine now believes that all government investigations relating to potential FCPA violations by the Company or related persons have been fully resolved. The Company anticipates no action by the Department of Justice (“DOJ”) in a previously disclosed investigation relating to these events.”
NSP said it self reported the results of its internal investigation to the SEC and the DOJ and “fully cooperated in the government investigations.”
The DOJ has not indicated if it will pursue criminal prosecution of anyone involved in the case.
Nature’s Sunshine Products Inc. trades on the Over-The-Counter Bulletin Board (OTCBB) under the symbol NATR.OB.
View the SEC’s Litigation Release No. 21162 (July 31, 2009) in SEC v. Nature’s Sunshine Products, Inc., Douglas Faggioli and Craig D. Huff, Case No. 09CV672 (D. Utah) here.
Download a copy of the SEC’s civil complaint here.