Nature's Sunshine Products, Inc., Douglas Faggioli and Craig D. Huff
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21162 / July 31, 2009
SEC v. Nature's Sunshine Products, Inc., Douglas Faggioli and Craig D. Huff, Case No. 09CV672 (D. Utah, Filed July 31, 2009)
SEC CHARGES NATURE'S SUNSHINE PRODUCTS, INC. WITH MAKING ILLEGAL FOREIGN PAYMENTS
The Securities and Exchange Commission has filed a settled enforcement against Nature's Sunshine Products Inc. (NSP), its Chief Executive Officer Douglas Faggioli and its former Chief Financial Officer Craig D. Huff. 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.
The 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. It is alleged that this 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. It is also alleged that NSP failed to disclose the payments to Brazilian customs agents in its filings with the Commission.
The civil injunctive action, which was 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 thereunder, 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.
NSP, Faggioli and Huff, without admitting or denying the allegations of the complaint, have consented to the entry of final judgments that would enjoin each of the defendants from future violations of the above-stated provisions and would order NSP to pay a civil penalty of $600,000, and Faggioli and Huff to each pay a civil penalty of $25,000.
