SEC Charges Herbalife With FCPA Violations
Herbalife Nutrition Ltd. agreed to pay over $123 million to settle FCPA violations after its Chinese subsidiaries bribed government officials with meals, gifts, and payments to secure licenses, suppress investigations, and manipulate media, while executives concealed the scheme through falsified expense reports and failed to enforce internal controls for over a decade.
Herbalife Nutrition Ltd. paid a total of more than $123 million to resolve FCPA charges, including a $55 million criminal fine to the DOJ and a $67.6 million SEC settlement comprising $58.6 million in disgorgement and $8.6 million in prejudgment interest. The SEC found that Herbalife’s Chinese subsidiaries made improper payments and benefits to Chinese officials to obtain sales licenses, halt investigations, and remove negative media coverage, while managers falsified expense reports and executives ignored repeated red flags. Herbalife failed to maintain adequate internal accounting controls, resulting in inaccurate books and records over more than a decade, and agreed to cease and desist, implement remediation, and report on compliance for three years.
Herbalife Nutrition Ltd. agreed to pay over $123 million to settle FCPA violations stemming from systemic bribery by its Chinese subsidiaries, which made payments, provided meals, and distributed gifts to Chinese government officials to secure sales licenses, curtail investigations, and remove negative coverage in state-owned media. Managers directed employees to falsify expense reports to conceal these illicit payments, while senior executives received repeated reports of high travel and entertainment spending and policy violations but failed to act or strengthen internal controls. Over more than a decade, these failures led to inaccurate books and records and a breakdown in the company’s internal accounting systems, enabling the corruption to persist unchecked. As part of the settlement, Herbalife paid a $55 million criminal fine to the U.S. Department of Justice and a $67.6 million civil penalty to the SEC, including $58.6 million in disgorgement and $8.6 million in prejudgment interest. The company consented to a cease-and-desist order and must report on its remediation and compliance improvements for three years. The SEC previously charged Herbalife China’s former managing director for orchestrating the scheme, and the investigation involved collaboration with the DOJ, FBI, and other federal agencies. The SEC emphasized that Herbalife’s case underscores the critical need for robust global internal controls to prevent and detect corruption.
Exhibits & Attached Documents (1)
Extracted insights
- $123.00M $123 million $100M–$1B
- $67.00M $67 million $10M–$100M
- $58.60M $58.6 million $10M–$100M
- $55.00M $55 million $10M–$100M
- $8.60M $8.6 million $1M–$10M
- person herbalife china managers
- person Sanjay Wadhwa
- agency Securities and Exchange Commission
- agency the sec’s investigation
- agency the sec’s order
- agency the securities and exchange commission
- The Securities and Exchange Commission announced Herbalife Nutrition Ltd. has agreed to pay more than $67 million to settle charges that it violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA)
- The U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of New York announced Herbalife will pay a criminal fine of more than $55 million for a total of more than $123 million paid in both actions
- The SEC’s order finds Herbalife’s Chinese subsidiaries made payments and provided meals, gifts, and other benefits to Chinese officials in connection with obtaining sales licenses, curtailing government investigations of Herbalife China, and removing negative coverage of Herbalife China in state-owned media
- Herbalife China managers asked employees to falsify expense documents in an effort to conceal the improper payments
- The order finds Herbalife executives received reports of high travel and entertainment spending in China and violations of Herbalife’s internal FCPA policies, but failed to detect and prevent improper payments and benefits and the falsified expense reports
- The order finds the improper payments and benefits were recorded inaccurately in Herbalife’s books and records and that Herbalife failed to devise and maintain a sufficient system of internal accounting controls
- Sanjay Wadhwa said “Herbalife’s inadequate internal accounting controls allowed an environment of corruption to exist in its Chinese subsidiaries for more than a decade,”
- Herbalife agreed to cease and desist from committing violations of the books and records and internal accounting controls provisions of the FCPA
- Herbalife agreed to pay disgorgement of more than $58.6 million and prejudgment interest of more than $8.6 million, and to report on the status of its remediation and compliance measures for a three-year period
- The SEC charged Herbalife China’s then-Managing Director for his role in orchestrating the scheme to bribe Chinese government officials
- The SEC’s investigation was conducted by Liora Sukhatme, Jack Kaufman, Christopher Mele, and Gerald A. Gross of the New York Regional Office with assistance from Sonali Singh and Tracy L. Price of the Enforcement Division’s FCPA Unit
- The investigation was supervised by Mr. Wadhwa
- The SEC appreciates the assistance of the U.S. Department of Justice Criminal Fraud Section, the U.S. Attorney’s Office for the Southern District of New York, and the Federal Bureau of Investigation
The Securities and Exchange Commission today announced that Herbalife Nutrition Ltd. has agreed to pay more than $67 million to settle charges that it violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA). In a parallel action, the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of New York today announced that Herbalife will pay a criminal fine of more than $55 million for a total of more than $123 million paid in both actions. The SEC’s order finds that Herbalife’s Chinese subsidiaries made payments and provided meals, gifts, and other benefits to Chinese officials in connection with obtaining sales licenses, curtailing government investigations of Herbalife China, and removing negative coverage of Herbalife China in state-owned media. As set forth in the order, Herbalife China managers asked employees to falsify expense documents in an effort to conceal the improper payments. The order finds that Herbalife executives received reports of high travel and entertainment spending in China and violations of Herbalife’s internal FCPA policies, but failed to detect and prevent improper payments and benefits and the falsified expense reports. The order further finds that the improper payments and benefits were recorded inaccurately in Herbalife’s books and records and that Herbalife failed to devise and maintain a sufficient system of internal accounting controls. “Herbalife’s inadequate internal accounting controls allowed an environment of corruption to exist in its Chinese subsidiaries for more than a decade,” said Sanjay Wadhwa, Senior Associate Director of the SEC’s New York Regional Office. “A strong system of internal controls is vital for issuers, especially those with operations around the globe.” Herbalife agreed to cease and desist from committing violations of the books and records and internal accounting controls provisions of the FCPA. Herbalife agreed to pay disgorgement of more than $58.6 million and prejudgment interest of more than $8.6 million, and to report on the status of its remediation and compliance measures for a three-year period. The SEC previously charged Herbalife China’s then-Managing Director for his role in orchestrating the scheme to bribe Chinese government officials. The SEC’s investigation was conducted by Liora Sukhatme, Jack Kaufman, Christopher Mele, and Gerald A. Gross of the New York Regional Office with assistance from Sonali Singh and Tracy L. Price of the Enforcement Division’s FCPA Unit. The investigation was supervised by Mr. Wadhwa. The SEC appreciates the assistance of the U.S. Department of Justice Criminal Fraud Section, the U.S. Attorney’s Office for the Southern District of New York, and the Federal Bureau of Investigation.
The Securities and Exchange Commission today announced that Herbalife Nutrition Ltd. has agreed to pay more than $67 million to settle charges that it violated the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA). In a parallel action, the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of New York today announced that Herbalife will pay a criminal fine of more than $55 million for a total of more than $123 million paid in both actions. The SEC’s order finds that Herbalife’s Chinese subsidiaries made payments and provided meals, gifts, and other benefits to Chinese officials in connection with obtaining sales licenses, curtailing government investigations of Herbalife China, and removing negative coverage of Herbalife China in state-owned media. As set forth in the order, Herbalife China managers asked employees to falsify expense documents in an effort to conceal the improper payments. The order finds that Herbalife executives received reports of high travel and entertainment spending in China and violations of Herbalife’s internal FCPA policies, but failed to detect and prevent improper payments and benefits and the falsified expense reports. The order further finds that the improper payments and benefits were recorded inaccurately in Herbalife’s books and records and that Herbalife failed to devise and maintain a sufficient system of internal accounting controls. “Herbalife’s inadequate internal accounting controls allowed an environment of corruption to exist in its Chinese subsidiaries for more than a decade,” said Sanjay Wadhwa, Senior Associate Director of the SEC’s New York Regional Office. “A strong system of internal controls is vital for issuers, especially those with operations around the globe.” Herbalife agreed to cease and desist from committing violations of the books and records and internal accounting controls provisions of the FCPA. Herbalife agreed to pay disgorgement of more than $58.6 million and prejudgment interest of more than $8.6 million, and to report on the status of its remediation and compliance measures for a three-year period. The SEC previously charged Herbalife China’s then-Managing Director for his role in orchestrating the scheme to bribe Chinese government officials. The SEC’s investigation was conducted by Liora Sukhatme, Jack Kaufman, Christopher Mele, and Gerald A. Gross of the New York Regional Office with assistance from Sonali Singh and Tracy L. Price of the Enforcement Division’s FCPA Unit. The investigation was supervised by Mr. Wadhwa. The SEC appreciates the assistance of the U.S. Department of Justice Criminal Fraud Section, the U.S. Attorney’s Office for the Southern District of New York, and the Federal Bureau of Investigation.