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Class-action lawsuit proposed against NuSkin
A proposed class-action lawsuit by shareholders has been filed against Nu Skin Enterprises following on the heels of announcements of investigations of the company's operations in China.
A Philadelphia law firm, Barrack, Rodos & Bacine, filed suit in U.S. District Court in Utah alleging that shareholders were hurt because the company failed to disclose it was engaging in "fraudulent sales practices" that were not in compliance with Chinese laws.
After two Chinese agencies disclosed last week that they were opening investigations into Nu Skin, the Provo company's share price fell more than 44 percent. Also named in the lawsuit were Truman Hunt, president and CEO, and Chief Financial Officer Ritch Wood.
"We believe the allegations are without merit and intend to defend ourselves vigorously," NuSkin said in a statement.
The investigations began after a People's Daily newspaper alleged the company appeared to be operating as a pyramid scheme. Nu Skin said it was in compliance with Chinese laws, and that it would cooperate with the investigations while also beefing up training of its independent distributors.