Greenberg: More 'Sanctions' Against Nu Skin?

(This column previously appeared on Herb Greenberg's Reality Check)

SAN DIEGO (TheStreet) -- Here's my quick read of the China disclosures in Nu Skin Enterprises' (NUS) just-published (and delayed) 10- K.

The only thing that really mattered to me was the highlighted line:

"It is currently unclear what impact the adverse publicity and our voluntary actions will have on our business in this market in the longer term or whether these voluntary actions will be effective in addressing concerns of regulators in Mainland China. Regardless, it is likely that we will be fined and could potentially face some other form of sanctions from these regulators."

That the company tells you that it is likely to be fined and that it could face other sanctions is significant. Nu Skin has already said that its audit committee is investigating the situation in China, where Chinese regulators have launched a probe of Nu Skin. Part of what the Chinese are looking at, the company says, is the "structure of our sales organizations and compensation and whether they violate application Chinese regulations."

Now the company snuck in that comment about being fined, and then added that it could face possible sanctions, including "a formal suspension of our ability to recruit new sales people and direct sellers, a temporary suspension of our ability to sell products in various markets or, in the most extreme cases, loss of existing licenses to operate in various jurisdictions in Mainland China."

Reality -- and my interpretation: This company is coming right out and telling you, by way of saying that it is "likely" to be fined, that it knows it has issues. Suggesting there could be more sanctions suggests it may be worse than it appears.

If you liked this article you might like

Herbalife, Nu Skin May Be Affected by New Chinese Regulations

Birchbox Revolutionized How We Buy Beauty Products

Take a Fresh Look at Nu Skin Enterprises

Market Recon: Crossed Wires? Hot Wire, Trip Wire, Live Wire

Nu Skin (NUS) Stock Tumbles on Downbeat Forecast