Girardi | Keese

Nu Skin hit with class action lawsuit

No company wants to be hit with a class action lawsuit, however, this is something that many deal with at some point. This is most common among large companies, many of which are publicly traded, but it is not always the case.

Our California readers, as well as many in the rest of the world, are paying close attention to a proposed class action lawsuit by shareholders against Nu Skin Enterprises. This company is well known for its direct selling of personal care products and dietary supplements. Now, the company is finding itself in news for all the wrong reasons.

The class action lawsuit was filed in U.S. District Court in Utah, alleging that shareholders were harmed because Nu Skin did not disclose that it was part of "fraudulent sales practices" in China.

The investigation got underway when a Chinese newspaper claimed that the company appeared to be running a pyramid scheme, as opposed to a legitimate business. According to Nu Skin, the company is in complete compliance with Chinese laws and they have every intention of cooperating with investigators while also increasing training amongst distributors.

As a result of the investigations, Nu Skin shares fell approximately 44 percent. In addition to the company, its CEO and CFO were also named in the lawsuit.

Class action lawsuits are nothing to take lightly as this means that a large group of people, in this case shareholders, have been negatively impacted by a company. The professional guidance of a legal team can help get any class action lawsuit off the ground and moving in the right direction.

Source: The Salt Lake Tribune, "Class-action lawsuit proposed against NuSkin" No author given, Jan. 22, 2014

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