Photo via Pixabay.
Photo via Pixabay.

Los Angeles-based Herbalife has agreed to pay $20 million to settle allegations that it made misleading statements about its China business model in numerous regulatory filings over a six-year period, the U.S. Securities and Exchange Commission announced Friday.

Herbalife consented to the SEC’s order without admitting or denying the allegations, regulators said. The order requires the nutrition company to cease and desist from further violations of the charged provisions and to pay a $20 million penalty.

According to the SEC’s order, in quarterly and annual SEC filings from 2012 to 2018, Herbalife told investors that while direct selling is permitted in China, multi-level marketing is not, and that as a result, Herbalife’s business model in China differed from that used in other countries.

The agency said Herbalife’s representations were untrue because its compensation model in China was very similar to the one used in the other countries.

“Herbalife deprived investors of valuable information necessary to evaluate risk and make informed investment decisions,” said Marc P. Berger, director of the SEC’s New York Regional Office. “When making disclosures to investors, issuers must ensure that those disclosures are accurate.”

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