Natural Health Trends Corp.
- Company Name
- Natural Health Trends Corp.
- Stock Symbol
- Class Period
- April 27, 2016 to January 5, 2019
- Motion Deadline
- March 9, 2019
- Central District of California
The complaint charges Natural Health Trends and certain of its officers with violations of the Securities Exchange Act of 1934. Natural Health Trends operates as an international direct-selling and e-commerce company whose subsidiaries sell personal care, wellness, and quality of life products under the NHT Global brand in more than 40 countries around the world.
The complaint alleges that, during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and operations. Specifically, the complaint alleges that, contrary to defendants’ representations that the Company’s “method of distribution complies in all material respects with the laws and regulations related to direct selling of the countries in which [it] currently operate[s],” Natural Health Trends was operating as a pyramid scheme in China, and consequently, Natural Health Trends was not in compliance with applicable Chinese laws and regulations. As a result of this information being concealed by defendants during the Class Period, Natural Health Trends’ securities traded at artificially inflated prices of more than $37 per share.
Then on January 7, 2019, GeoInvesting reported that a prominent state television broadcaster in China had aired an exposé on January 5, 2019 asserting that Natural Health Trends was operating a pyramid scheme in China, contrary to Chinese law. According to the report, an expert claimed that the Company was a pyramid scheme because it actually makes money by recruiting members, even though its business appears to be selling juice. In addition, the program reported that one of the Company’s juice products did not have domestic approval and registrations related to wellness foods. On this news, the price of Natural Health Trends shares fell $4.89 per share, or more than 24%, to close at $14.88 per share on the next trading day, January 7, 2019.