Herbalife to Pay $20 Million for Misleading Investors

The Securities and Exchange Commission today announced that Herbalife Nutrition Ltd.—a direct selling company with operations in over 90 countries— has agreed to pay $20 million to settle charges that it made false and misleading statements about its China business model in numerous U.S. regulatory filings over a six-year period. According to the SEC’s order, in quarterly and annual SEC filings between 2012 and 2018, Herbalife told investors that while direct selling is permitted in China, multi-level marketing is not, and that as a result, Herbalife’s business model in China differed from that used in other countries. Herbalife’s representations were untrue because it employed a very similar compensation model in China to the one it employed in every other country. Herbalife purported to pay its service providers based on hours worked.