Nu Skin to pay $47 million to settle Chinese pyramid suit
A lawsuit filed by Nu Skin shareholders against the company appears to be drawing to a conclusion.
The class-action lawsuit was filed in February 2014, accusing Nu Skin of misleading investors about the legality of its operations in China.
Chinese media reported suspicions Nu Skin was operating a pyramid scheme in January 2014. A subsequent investigation by Chinese authorities saw Nu Skin fined $781,000.
The class-action lawsuit has been quietly playing out over the past two years, with news yesterday of a potential $47 million dollar settlement.
The settlement, which will be paid by Nu Skin’s insurers, is not expected to result in a net charge to the company’s income statement, Nu Skin said in a filing.
The company said the deal is subject to court approval and a final approval is expected in mid-2016.
The settlement would see an end to class-action lawsuit. The impact on Nu Skin’s global business operations, if any, is as of yet unclear.
Following the shutdown of Nu Skin’s Chinese pyramid scheme, profit plummeted by 63%.
The status of the SEC investigation, purportedly also looking into Nu Skin’s Chinese pyramid scheme operations, remains unclear.
In other Nu Skin news, the company recently lost an appeal in Japan over a customs dispute.
Following the loss in court, Nu Skin are now liable for around $32 million dollars in customs duties.
Update 17th October 2016 – Last Thursday Nu Skin’s proposed $47 million dollar settlement was approved.
in response to the class action lawsuit, nuskin through its attorneys labaton sukharow, filed a motion to dismiss which was denied by the court on feb 18, 2016.
on feb 22, 2016, nuskin entered a Settlement Term Sheet (the “Agreement”), for a potential settlement of the class action.
so, in all of five days from feb 18th to feb 22nd, both parties reached a settlement agreement! that was really quick work!
i guess with the nuskin insurer picking up the tab, nuskin threw Big Money [ $47 million] on the table to get rid of this class action quick and fast.
so, the plaintiffs [class action] and the defendants [nuskin] all go home happy, but the insurer must be banging its head against the wall right about now 🙂
I wonder what a $47 million dollar settlement does to your premium…
Yeah, but watch it try to renew the insurance next year.
EVERY Publicly traded MLM’s insurance will go up, probably by a significant amount. Not sure what part of their policy covers shareholder lawsuits, but you can bet this ain’t cheap.