Nu Skin Enterprises, Inc. Has A Confirmed, Undisclosed SEC Probe

Nu Skin

Nu Skin Enterprises, Inc. (NYSE:NUS), the multi-level marketing company, has a recently confirmed but undisclosed SEC probe, according to Probes Reporter. Probes Reporter revealed the SEC probe a few hours before Nu Skin unveiled its third-quarter results last week.

Confirmed Undisclosed SEC probe

According to Probes Reporter, the Securities and Exchange Commission confirmed in its letter dated Oct. 8, 2014 that Nu Skin Enterprises was somehow involved in a recently active and ongoing investigation. The report points out that a confirmed investigation is the highest standard one can achieve regarding undisclosed SEC activity at a public company. The report highlights that no disclosures of SEC investigative activity were found in the past two years of Nu Skin’s SEC filings. The multi-level marketing company has now been added to Probes Reporter’s watch list of companies with undisclosed SEC probes.

The report also points out that in a letter dated Sept. 24, 2014, the SEC cited the “law enforcement exemption” of the Freedom of Information Act (FOIA) as a basis to deny the public access to the detailed records Probes Reporter sought on Nu Skin. The report notes that as a matter of law, the SEC is acknowledging some sort of investigative activity.

The Probes Reporter points out that the SEC’s assertion of the law enforcement exemption shouldn’t be construed as an indication by the SEC or its staff that any violations of the law have occurred with respect to any person, entity or security. The website also indicated in its report that Nu Skin could have disclosed the SEC probe while unveiling its third quarter earnings.

Nu Skin’s disappointing third quarter

Last week, Nu Skin Enterprises, Inc. (NYSE:NUS) unveiled its third quarter earnings, reporting earnings of $1.12 per share, compared to $1.80 in last year’s third quarter, on $638.8 million in revenue, a 30% year-over-year decline. Management’s fourth quarter guidance was also a significant disappointment from consensus estimates. Management expects fourth quarter revenue to be between $590 million and $610 million. They expect earnings per share to be between 72 cents and 77 cents against consensus estimates of $1.01 per share in earnings and $659 million in sales.

Interestingly, at the beginning of the call after the earnings release last week, Nu Skin CEO Truman Hunt said: “The company’s Audit Committee initiated a voluntary review of our China business last January in response to media and government inquiries there.” He added: “To our knowledge, the SEC has not opened a formal investigation nor made any request for the production of documents. As always, we’re committed to maintaining an open and a transparent dialogue with the SEC and with all regulatory agencies, both here and abroad.”

As reported by ValueWalk, in January, Nu Skin released a letter to customers in China indicating that it’s reviewing the practices of its employees and sales force in the country and vowed to implement corrective actions. The multi-level marketing company also said that it would stop its promotional meetings, thus suspending the recruitment of new distributors in China while conducting its internal review.

About the Author

Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports