Press release from PR Newswire
Hagens Berman: Five Days Remain to File for Lead Plaintiff in Nu Skin Class Action as Company Reveals Likely China Fines and Sanctions
Wednesday, March 19, 2014
Hagens Berman: Five Days Remain to File for Lead Plaintiff in Nu Skin Class Action as Company Reveals Likely China Fines and Sanctions14:35 EDT Wednesday, March 19, 2014
BERKELEY, Calif., March 19, 2014 /PRNewswire/ -- Hagens Berman Sobol Shapiro LLP, a national investor-rights law firm, alerts purchasers of Nu Skin Enterprises, Inc. (NYSE: NUS) ("Nu Skin" or "the Company") stock who purchased between Oct. 25, 2011 and Jan. 16, 2014 (the "Class Period") that the company has announced potential sanctions and fines in light of a securities fraud lawsuit, and reminds investors of the March 24, 2014 deadline to file as a lead plaintiff in the class action. Investors who suffered significant financial losses related to the case can email NUS@hbsslaw.com for more information.
On March 13, 2014, Nu Skin announced in its annual report that it expects to be fined and possibly sanctioned by Chinese regulators who are currently investigating claims that the company operated an illegal pyramid scheme, greatly endangering the investments of its shareholders.
"These other sanctions could include a formal suspension of our ability to recruit new sales people and direct sellers, a temporary suspension of our ability to sell products in various markets or, in the most extreme cases, loss of existing licenses to operate in various jurisdictions in Mainland China," the report states. "Any of these actions or outcomes could materially harm our business and financial condition."
Following this announcement by the company, Nu Skin stock fell four percent to $73.57 in after-hours trading.
Three lawsuits have been filed in the Utah District Court alleging that Nu Skin made false or misleading representations to investors regarding its business in China. These cases will likely be consolidated into one case. If you bought stock in the Company during the Class Period, have significant losses in excess of $100,000 and wish to serve as a lead plaintiff in these cases, please contact Hagens Berman Partner Reed Kathrein, who is leading the firm's investigation, by calling 510-725-3000. Additional information is available at http://hb-securities.com/investigations/NUS.
Nu Skin's annual report also states that, "The adverse publicity and suspension of business promotional meetings and acceptance of applications has had a significant negative impact on the number of Sales Leaders and Actives, and our revenue in the short term will be negatively impacted by these voluntary actions. Any inability to resume normal business operations in the near term could have a more significant impact on our business."
According to the complaints, Nu Skin's Chinese business model relies on independent distributors who recruit more distributors and then earn a piece of their sales. On Jan. 15, 2014, a Chinese newspaper reported that Nu Skin was in violation of Chinese laws that prohibit pyramid schemes. Two Chinese agencies announced investigations of the company in the days following the publication of the article.
Revenue from China played a significant role in the company's growth over the last several years. Sales in China accounted for nearly one third of Nu Skin's total sales. Hagens Berman's investigation shows, according to data compiled by Citron Research, that a major Chinese newspaper published an expose on "illegal" operations in China in June 2013 that included a look at Nu Skin's business model. Nu Skin never revealed this expose to investors and did not seek to address the allegations until the Chinese government announced its investigation in January 2014.
Following the announcement of the Chinese government's investigation, Nu Skin's stock price declined dramatically, losing nearly half of its value in three days of trading. The stock price fell from a close of $136.47 on Jan. 14, 2014, to a close of $79.57 on Jan. 17, 2014. The stock continues to trade well below previous figures, closing at $76.69 on March 18, 2014.
Bloomberg reported on Feb. 17, 2014, that China's State Administration for Industry and Commerce plans to tighten direct selling rules following the claims brought against Nu Skin, and the Wall Street Journal said recently that January brought sharp declines when China announced its investigation of the company's sales practices.
Hagens Berman is continuing to investigate what Nu Skin's management knew, and when, in light of the Chinese government's investigations and the subsequent decline of the stock price.
The deadline for investors to move for lead plaintiff in the case is March 24, 2014.
Persons with non-public information who want to consider their options to help in the investigation or take advantage of the SEC Whistleblower program may contact Reed Kathrein at 510-725-3000 or email the firm at NUS@hbsslaw.com for more information. Under the new SEC Whistleblower program, whistleblowers who provide original information to the SEC may receive rewards totaling up to 30 percent of any successful recovery made by the SEC.
About Hagens Berman Hagens Berman Sobol Shapiro LLP is an investor-rights class-action law firm with offices in nine cities. The Firm represents investors, whistleblowers, workers and consumers in complex litigation. More about the Hagens Berman and its successes can be found at www.hb-securities.com. The Firm's Securities News newsletter is at http://www.hb-securities.com/newsletter. The Firm's blog is located at www.meaningfuldisclosure.com.
Contacts Firmani + Associates Mark Firmani, 206-443-9357 firstname.lastname@example.org
SOURCE Hagens Berman Sobol Shapiro LLP