Nu Skin (NUS) Shares Fall Resulting in Class Action Lawsuit Firm Investigations

By on January 17, 2014

Several class action law firms are investigating allegations that Nu Skin Enterprises, Inc. is operating an illegal pyramid scheme.  Shares of the personal care product company fell nearly 40% over two days after The People’s Daily, a Chinese newspaper, called Nu Skin’s bonus and worker-management systems a direct marketing scheme.   Chinese officials have commenced a probe into the newspaper’s claims.

Most of Nu Skin’s sales are derived from China.  Mainland China accounted for $667.4 million, or 31%, of the company’s $2.16 billion in total revenue for the nine months through September.  Shen Danyang, a Chinese government spokesman, said violations of direct sales and marketing regulations will be handled in accordance with laws.

Nu Skin CEO has denied the claims in a telephone interview with Bloomberg News.  However, this is not the first time Nu Skin has been accused of running a pyramid scheme.   In August 2012, Andrew Left of Citron Research published a series of articles documenting evidence of the multi-level marketing scheme.

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