In its May 7, 2020 10-Q filing, Herbalife Nutrition Ltd. (Herbalife), a dietary and nutritional supplement company, disclosed that it has now reserved $123 million to potentially resolve previously disclosed US Foreign Corrupt Practices Act (FCPA) investigations by the US Securities and Exchange Commission (SEC) and the US Department of Justice (DOJ). This represents an $83 million increase from the $40 million Herbalife had previously set aside in connection with resolving these investigations, which are focused on Herbalife’s external affairs expenditures in China, as well as a more general review of the Company’s business in China and its books and records and internal controls.
In its May 7 filing, Herbalife also stated that it has reached an understanding in principle with both the SEC, under which the SEC would allege violations of the FCPA’s books and records and internal controls provision, and the DOJ, under which the Company would enter into a three-year deferred prosecution agreement with the DOJ for conspiracy to violate the FCPA’s books and records provisions. As part of these resolutions, the Company would undertake self-reporting obligations to the SEC and DOJ for three years, and would pay penalties, disgorgement and prejudgment interest totaling $123 million. Herbalife stated that these resolutions are not yet final, and remain subject to additional negotiation, approval by the Company’s board of directors, and—as to the DPA—court approval. The Company stated that it continues to cooperate with the SEC and the DOJ.