SEC orders suspension of Nature's Sunshine's stock trading
Friday, November 09, 2007
http://www.heraldex
Provo-based direct seller has 21 days to appeal order
An administrative law judge with the U.S. Securities and Exchange Commission has ordered the stock registration of Nature's Sunshine Products Inc. to be revoked, citing its failure to file audited earnings reports since 2005.
Administrative Law Judge Carol Fox Foelak, in an order issued Thursday, said the revocation of the Provo direct seller's stock will "serve the public interest and the protection of investors."
"The violations were serious in that failure to file periodic reports violates a crucial provision of the Exchange Act. The purpose of the periodic reporting requirements is to publicly disclose current, accurate financial information about an issuer so that investors may make informed decisions," Foelak wrote in the order.
Nature's Sunshine, which lost its stock listing on Nasdaq in April 2006 and is now trading on over-the-counter "pink sheets," said it has taken substantial steps to return to compliance and plans to appeal Foelak's order in the next 21 days.
"We have 21 days to appeal, during which the stock will continue to trade," said Steven Anreder, the company's spokesman. "The company cannot predict what, if any, impact the commission's determination may have on its financial statements. We don't believe this order or any final revocation order would affect the company's business operations."
In a statement today, Nature's Sunshine said that if its stock is indeed suspended from trading, "broker-dealers would not be permitted to effect transactions in the company's shares until the company files a new registration with the SEC."
The SEC's Division of Enforcement began administrative proceedings against Nature's Sunshine in July after an investigation found the company failed to file its Form 10-K annual earnings reports since March 16, 2005 and its audited quarterly reports since June 30, 2005. The SEC had sought to revoke the company's stock for up to a year.
But Foelak, in the order, recommended that "neither dismissal of the proceeding, as requested by Nature's Sunshine, nor a suspension of registration for a period of twelve months or less is an appropriate disposition.
That's because "the investing public still does not have access to past and current audited financial information, and Nature's Sunshine is currently unable to predict a date when this will occur," she wrote.
Nature's Sunshine hasn't been able to meet the SEC's reporting requirements since KPMG LLC resigned as its auditor in March 2006, and will not until its new auditor, Deloitte & Touche, completes an audit of its financial statements from 2004 through 2006.
"We don't have a date for the audit's completion," Anreder said.
The company has filed preliminary unaudited unreviewed financial information for the fiscal year ended Dec. 31, 2006 and for the following two quarters but these are likely subject to "significant adjustment and a likely restatement" once the audit is done, the order said.
Nature's Sunshine is subject of an ongoing class-action lawsuit over alleged insider trading and securities law violations. The suit alleged Nature's Sunshine and three executives filed misleading Sarbanes-Oxley Act certifications between March 16, 2005, and Nov. 22, 2005, and false Form 10-Q earnings with the SEC to elicit "clean" audit reports from KPMG. This case is now in discovery.
The company is also being audited by the Internal Revenue Service. The IRS, in early 2006, began an audit of the company's income tax returns for the years 2002 through 2005.
Shares of Nature's Sunshine dipped 10 cents or 0.83 percent to $11.90 in Friday's trading.
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